MBS Day Ahead: Bonds Still in Limbo, Despite Recent Victories

Posted To: MBS Commentary

The past 3 trading sessions marked 3 of the 5 lowest closes for 10yr yields in 2017. Friday’s strength did a nice job of pushing back against a potential bounce that took shape after last week’s Fed announcement. That strength helped build the sense that bond markets were staging or “hanging-out” near the year’s best levels , but still mulling the decision to break convincingly lower. After all, we did see the year’s best levels on Wednesday morning, so there’s a case to be made for not setting the bar too high when it comes to what a bond rally must look like. On the other hand, we have yet to see a “confirmed” close under “the gap” (an important technical zone from 2.15-2.17%). “Confirmation” would mean 2 consecutive closes under…(read more)

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