MBS Day Ahead: Bouncing at This Pivot Point is Still a Risk

Posted To: MBS Commentary

2.95% was the closing high for 10yr yields back in late February. While we saw 10s move as low as 2.935 yesterday, that seemed to be a product of month-end bond buying . The month-end momentum tends to run its course by the 3pm CME close , and we often see volatility in the final 2 hours of the domestic session. That volatility can be thought of as bond markets "getting back to where they want to be" after being "forced" to be in a certain position for the end-of-month trades that are marked at 3pm. In yesterday's case, yields got right back above 2.95%. Now, today begins with bonds very little-changed from the overnight session. The longer yields remain above 2.95% this week, the more it runs the risk of looking like a "ceiling/floor" pivot point. For now...(read more)

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