MBS Day Ahead: Quick Check on Ceilings as Bonds Weaken

Posted To: MBS Commentary

If bond markets had a nice month-end buying spree at the end of June, it happened on the 27th. The next two days saw moderate weakness . Yesterday's July opener took the weakness to a slightly higher level. While there's every possibility that yesterday's "new month" trading has already run its course (thus leaving bonds very light on inspiration until Thursday at the earliest), 3 successive days of weakness means it's a good idea for us to check in with nearby overhead ceilings. 2.885% has came up several times in June and now provides an early morning bounce today. If bonds re-weaken and head higher, we'd be looking at 2.91 nearby, followed by 2.95%. Momentum metrics suggest a shift in short-term momentum, and a leveling-off in longer-term momentum. Keep in mind...(read more)

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