Posted To: MBS Commentary

To buy the dip or not to buy the dip (in bond prices). That is the question faced by traders today as 10yr yields hit the 1.70% technical level in after hours trading yesterday. This potential technical support coincides with the upper boundary of the ongoing trend channel. The day begins with a decent bounce from that level, but we should probably avoid getting too excited about it just yet. Bonds have bigger things to think about than modest technical bounces at long-term highs. While that sort of bounce can inform decent short-term momentum, the overall trend will continue to be dictated by big-ticket items like covid, inflation, Fed rate hike expectations, and curve trading (all of which are intertwined to a large extent). The case count narrative is well known: Inflation expectations haven't…(read more)

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Source: Mortgage News Daily