Thursday, August 2, 2018

MBS Day Ahead: Pivotal Trading Levels in Stocks and Bonds

Posted To: MBS Commentary

While recent bond market trends haven't been fun for originators, they've at least been more interesting from a market-watching standpoint. Markets throw the laws of physics on their head, where objects at rest are decreasingly likely to stay at rest (see late July range breakout!) and objects in motion are increasingly likely to be sent in the other direction. With that in mind, the recent selling trend in bonds has been in motion for just long enough (according to momentum technicals) that we can start to look for a shift. To be clear, I'm not here to predict a glorious turn-around in rates. I'm simply saying that momentum is "oversold," and that some sort of bounce becomes more and more possible as the oversold condition remains. The bounce could be shallow or short...(read more)
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