MBS Day Ahead: Bond Bounce Beholden to Fed and Election Drama

Posted To: MBS Commentary

Let's not get too excited, but bonds have begun an attempt to bounce at the higher side of their multi-month trend channel (the "uptrend" leading toward higher rates in linear channel of higher highs and higher lows). Yields bounced on the upper trendline for the 3rd time in 4 days yesterday, and were then able to make additional gains in the overnight session. If today proves positive for bonds, it would be the 4th straight day with yields lower at the close vs the open (which makes for green candlesticks in the chart below). This would also keep the blue line under the red line in the fast stochastic study at the lower section of the chart. As the caption suggests, we'd ideally like to see the "stochastic cross" occurring in 'oversold' territory (above...(read more)

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