MBS Day Ahead: Bonds at Least Have a Chance

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Posted To: MBS Commentary

I've been pretty bearish on bonds, in general, since the end of 2016. Against that backdrop, we can of course still look for tactical opportunities, but there are also times to reinforce our defensive stance. The most recent bounce in rates/yields near the end of August was one of those instances where "defense" made more sense. With yields operating near 2.90%--the top of the recent range-- it still makes sense , but the longer we see bonds resist breaking to higher levels, the more we may wonder if we're going to see a friendly bounce occur INSIDE the broader consolidation range. In other words, maybe we'll see a short-term ceiling at the teal line instead of the upper yellow line. There's already some technical support for that idea from fast stochastics (short...(read more)

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