MBS Day Ahead: Consolidations Are Everywhere And This One's About to Break

Posted To: MBS Commentary

First thing's first: "consolidation" refers to a pronounced narrowing of a trading range after an uptrend or downtrend. Consolidations can occur with a slight positive or negative bias (as long as the trading range is narrow enough), but the most glaring examples are those that orbit the same central levels for their duration. Consolidations come in a wide variety of sizes . The biggest arguable consolidation lasted 4 years (from 2003 to 2007) when bond markets took their only extended break from the longer term rally that began in the early 80's. 2016 has offered a fairly big consolidative range. It lasted from February through early June and then broke in favor of lower rates over the past 2 months. Over the past 2 weeks, however, we've had a different consolidation...(read more)

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