Posted To: MBS Commentary
When yields began to rise in August 2020 (and when they continued to rise at an even fast pace in Q1), we began looking for an intermission that would allow things to level off before the bond market committed to its next phase of momentum. That intermission arrived with the month of April and has been intact ever since. The Q2 trading range coincides perfectly with the uncertainty surrounding economic outcomes in the 2nd half of the year, as well as the less relevant implications of economic performance in the first half of the year. That’s not to say bonds won’t respond to data in the upcoming weeks–just that there’s a high bar when it comes to breaking outside various sideways ranges. If that’s our baseline assumption, we increasingly have to look for resistance when yields…(read more)
