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MBS Day Ahead: Bonds Threaten to Hit Weaker Momentum Button, but Waiting For Fed

Posted To: MBS Commentary

Heading into the end of March, markets were generally preoccupied with the healthcare drama in congress and bond yields were generally consolidating into a range just under 2.42% in terms of 10yr yields. When bonds move sideways after rallying for several weeks (as they had since March 15th), momentum indicators begin to suggest a bounce (toward higher yields) is in the works. That potential bounce can be seen as the very slight break above the lower line in the "fast stochastic" section of the following chart. The negative momentum indication wasn't really able to be questioned until Monday's super strong rally, but as we discussed, there was always a risk that Monday would simply be driven by a quick, one-time adjustment for "new month" tradeflows. For now, that…(read more)

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Source: Mortgage News Daily

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