Thursday, March 28, 2019

MBS Day Ahead: A Few Ways to Guard Against a Reversal

Posted To: MBS Commentary

It's no secret that bonds have rallied impressively in March. The bigger and faster a rally is, the more we may worry about the risk of a bounce. To be sure, bounces will happen. They can be healthy byproducts of a big move or they can be an alarming warning sign for more potential weakness. Certainly, we can look at any given bounce in conjunction with its underlying motivations in trying to determine what sort of movement we should worry about. For instance, if rates are surging higher after a much stronger jobs report next Friday, that's the kind of "underlying motivation" that matters. But what if such motivations are in short supply and we're still observing movement? In those cases, technical analysis is useful--simple stuff like pivot points and trend channels as...(read more)
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