Posted To: MBS Commentary

The incredible range trade of Q3, 2020 is well established and, by now, hopefully well understood. The boundaries are clear in terms of 10yr yields with .62+ on the low end and .72+ overhead. The range has been completely unbroken for a month and, if you can forgive one false alarm breakout to .79%, it's been unbroken for nearly 2 months. Before that, we could go all the way back to April through early July and view the same levels containing most of the trading action. In short, this is the core of the post-covid sideways range in the bond market. Last week began with yields being squeezed in such a narrow consolidation pattern that a breakout was inevitable (yellow lines below). Yields broke to higher levels. In these cases (were a consolidation pattern inside a broader sideways trend…(read more)

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Source: Mortgage News Daily