Posted To: MBS Commentary
As of last Friday, the bond market looked keen on rejecting any attempt to revisit the recent ceiling in late October (10yr yields were just over 1.70%). Now this week, we’re seeing yields make another run at those highs. Without considering any fundamentals or correlations with other markets, we can see that 1.52% has been an important pivot point in the past month. It has generally acted as a floor while 1.65 has been the most prevalent ceiling. But there are some reasons to view floors and ceilings as moving targets. See the internal trendlines in the following chart (teal lines). These lines actually capture more floor/ceiling bounces than the 1.52/1.65 pivot points. That’s a fairly basic drawing, but the point is that the trend may be shifting from “sideways” to “slightly…(read more)
