Posted To: MBS Commentary
It got much worse. Bond yields were up more than 8bps by the open with the 10yr just a hair under 1.47%. It might be hard for traders to avoid ringing the 1.50% bell even if bonds manage to bounce today or in the next few days. The kicker is that the weakness lacks the sort of discrete, obvious headline/data motivations that make for satisfying levels of understanding. It continues to be a move driven by big-picture momentum, short-term stop-loss triggers, technicals, asset manager reallocations, month-end trading, convexity hedging, and other esoteric, behind-the-scenes factors. From a purely technical perspective, the additional weakness was a risk based on the breakout of the longstanding trend channel last week (yellow lines below). The risk now is that traders will aggressively try to…(read more)
