MBS Day Ahead: For Bonds, Year-End is Looking Like One Big November

Posted To: MBS Commentary

A sideways range with higher lows and lower highs... The risk of p eriodic volatility regardless of economic data's suggestion... A certain portion of traders making certain trades simply because they have to hold certain positions through a certain date... All of the above could be said of the November bond market environment most years. This year was no exception. Treasury yields formed a nearly perfect triangle heading into the end of the month. But to whatever extent yields continue finding support at successively lower ceilings (the past 3 days have each seen "lower highs" in terms of intraday 10yr yields), December is shaping up to be very much like November --just with more elbow room. The following chart shows this (potential) phenomenon. The initial uptrend line (lower...(read more)

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