MBS Week Ahead: Last Week of Summer For Bonds

Posted To: MBS Commentary

Even though quite a few kids are going back to school today, there's still one week of Summer remaining for the bond market. Labor Day (this upcoming weekend) is a major dividing line. It marks the shifting of gears back into a more serious and focused frame of mind after a few months of being on autopilot . Given the established rarity of big-picture momentum during those months, it's no surprise to see that we've been moving sharply sideways in a range that's not even 20bps wide in 10yr yields. There's a case to be made for viewing the technicals and the range boundaries as largely irrelevant at this time of year. Reason being: the next trend that ends up taking shape (as soon as next week) historically doesn't care what went on during July/August. It's more likely...(read more)

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