MBS Day Ahead: Start Preparing For Bigger Moves Ahead

In the day just past, bonds initially extended the post-Fed gains with 10yr yields briefly hitting 1.973% before bouncing to end unchanged on the day. The selling was almost exclusively motivated by technicals and tradeflows with the average bond trader actively looking out for a correction ahead of the important week of data at the beginning of July. That's the week that will do the most to inform a Fed policy shift going forward. In the day ahead, bond traders will continue actively looking out for a correction! Please be advised that a brief correction in the next 2 weeks is not only a strong possibility, but would also be a bit sharper than you're used to. That's because the move seen so far in 2019 has effectively entered the bond market into a high stakes game--one that's...(read more)

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