MBS Day Ahead: Fight Continues For Bonds; New "Gap" to Watch

Posted To: MBS Commentary

For the past 5+ months, any discussion of "the gap" among bond traders could have only referred to the 2.15-2.17 gap created on Veterans Day weekend in 2016 (Nov 11-13). Yields closed at 2.15 before the weekend and opened at 2.17 when trading resumed the following week. Gaps instantly become significant targets for traders. The first time trading levels re-visit a gap, the result is more often a bounce. That's how it happened with the 2.15-17 gap this time around. Yields made it back early last week, but definitely bounced. If we return, we'll have a better chance of breaking through. For now though, we have another gap to contend with. This one was created by the French election weekend, and it took 10yr yields from closing levels of roughly 2.25 to opening levels of just…(read more)

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Source: Mortgage News Daily

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