MBS RECAP: Bonds Confirm Technical Shift But Stop Short of Breakout

Posted To: MBS CommentaryYesterday’s bond market weakness introduced some risk of a technical shift back toward higher yields. Specifically, fast and slow stochastics (shorter and longer term momentum gauges) were simultaneously ‘overbought’ for the first time since April. Making things complicated was the fact that bonds were still showing some signs of resilience as they didn’t lose too much ground despite the surge to all-time highs in the S&P. Today proved to be too much for that resilience. The 8:20am CME open brought a noticeable imbalance of sellers vs buyers. Minutes earlier, Treasury Secretary Mnuchin commented on the potential for a trade deal with Canada by the end of the week as well as his lack of concern for the shape of the yield curve. Neither comment was bond friendly, but it would…(read more)Forward this article via email:¬†¬†Send a copy of this story to someone you know that may want to read it.

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Michael Ayoub, Author NMLS ID 6631