MBS Day Ahead: Key Levels to Watch in Stocks and Bonds

Posted To: MBS Commentary

After spending most of July in a narrow, sideways trend, bonds broke higher in yield and looked like they would begin a classic range-breakout sell-off. In other words, momentum had been sideways and because they broke higher in yield out of that range, the momentum implication was toward weaker levels. But now the past 5 trading sessions have seen yields make a case for a new sideways range . Whereas the old range was roughly 2.81-2.89, the new range is shaping up to be 2.93-3.02. Whether or not it holds may be dependent on how related markets are trading (as seen in today's chart). For Treasuries' part, they seem at least WILLING to be resilient in the face of ramped-up issuance amounts, stronger stocks, and lighter summertime liquidity. Today's key event for bonds is the 10yr...(read more)

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