MBS Day Ahead: Correction Continues as Bonds Test Another Technical Ceiling

Posted To: MBS Commentary

With a moderate dose of weakness in the overnight session, 10yr yields have quickly found themselves on the doorstep of 1.25%–a level that marked the threshold of a fun little party over the past 2 days as yields moved as low as 1.128%. The prevailing belief is that rates are entering another period of consolidation before making their next big move this Fall/Winter, but we're still not sure where the boundaries of that range will be. A ceiling of 1.25% would be among the most bullish scenarios. This looks like too much to ask for at the moment, but there is a small amount of weakness that could be tolerated without affecting the potential consolidation pattern seen in the following chart. In the rather likely event that weakness continues and/or that volatility proves to be higher in…(read more)

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MBS Day Ahead: Correction Continues as Bonds Test Another Technical Ceiling
MBS Day Ahead: Correction Continues as Bonds Test Another Technical Ceiling

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