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MBS RECAP: Game Over? Maybe, Maybe Not…

September 12, 2019
by admin

10yr yields hit 1.80% today. Using the power of the MBS Live search feature, I compiled the following list to put 1.80% in context:

“I’d be looking at 1.80% in 10yr yields as the first threshold of concern. We could weaken as much as we want under that level and it wouldn’t even be a mild concern. ” – 8/6/19

“yields couldn’t make it up and over 1.80% before the consolidation momentum kicked in.” (referenced as top of the new sideways range) 8/12/19

“Whenever traders feel utterly confident that the near-term bottom is in, we should see some more meaningful momentum toward higher rates. But until we’re moving well above 1.62% and more officially, 1.79%, it’s not “over.” That’s simply how big the selling pressure could be if an average amount of volatility persists. Moving back up to 1.80% would actually be quite healthy and quite good for MBS, assuming that’s the extent of the weakness.” – 8/19/19

” We can watch 1.55 as a preliminary ceiling. A break above would build a case for a broader correction, but we wouldn’t start to worry about such things until 1.62% at the earliest. In fact, even a move to 1.80 would not be enough to derail the prevailing lower rate narrative–assuming a strong show of support after the weakness.” -9/3/2019

And then pretty much the entire article from 9/5/19: Beware The Bounce.

So we’re now pretty much hoping for that 1.80% show of support to materialize. If it doesn’t it’s a LONG way up to levels that have more recent historical volume-implied support (like 1.94+).

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