MBS Week Ahead: Bonds on The Ropes as Month Ends and Data Hits

Posted To: MBS Commentary

Last week's moderate resilience could have been temporary due to 'month-end' This could also help today, to some extent If it doesn't, it's the first clue about a potential break of the long-term range If data confirms that break, Fed rate hike fears will increase and bonds won't be happy The holiday-shortened week begins on a bit of a gloomy note, both because of where bonds were already trading at the end of last week as well as the moderate weakness seen in the overnight session. Any push toward higher yields this week will increasingly cast a vote for bigger picture losses as weakness would confirm a break out of the triangular, consolidative range seen in the chart below (teal lines). Not only would this break the trading range in yields, but it would also put an...(read more)

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