MBS Day Ahead: Suddenly Serious as Momentum Risks Reversal

Posted To: MBS Commentary

The 2 weeks leading up to last week's FOMC Announcement (and Bank of Japan too) saw an exceptionally narrow trading range. The 2 weeks before that saw a fairly quick move higher from all-time low rates (in Treasuries; Mortgages didn't quite make it). Those sorts of sideways slides can either open the door for a bounce back toward lower rates, or they can merely be a pause before more selling. Up until yesterday, it looked like we were dealing with a friendly bounce . The important technical levels we'd been using to track the range had been broken on the low side and momentum indicators shifted in our favor. Even after yesterday's weakness, the key level of 1.52% remained intact as a ceiling. Today unfortunately begins with 1.52% having already been broken (incidentally, 1.52...(read more)

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