Yesterday was good for bonds with 10yr yields covering more ground toward lower yields during domestic trading hours than any other day since February.  Nonetheless, when faced with an opportunity to break below the 1.62% resistance level, they ran the only play in the playbook (they bounced higher). 

20210414 open2.png

To be perfectly fair to the bond market, this type of behavior is pretty normal, even when yields are getting ready to break toward lower levels.  To be clear, the pattern we’re seeing now doesn’t necessarily imply a higher than average likelihood of a breakout.  Rather, the point is that 1.62% resistance doesn’t have a bearing on what will happen in the future.  We’ll break lower if we’re going to break lower and there’s nothing about the bouncy behavior that necessarily suggests otherwise.  Consider the past several weeks of 1.62% resistance in the context of FIVE MONTHS of resistance in this historical example.

20210414 open.png

Today’s calendar is light, with no major econ reports on tap.  Fed Chair Powell will take part in a Q&A with the Economic Club of Washington at noon ET, but it’s hard to imagine what he might say that hasn’t already been said on numerous recent occasions.  Still, a Fed Chair appearance is always worth the market’s attention, even if only to be vigilant about unexpected comments.


MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

MBS

UMBS 2.5

103-12 : +0-02

Treasuries

10 YR

1.6380 : +0.0150

Pricing as of 4/14/21 10:09AMEST

Tomorrow’s Economic Calendar

Time Event Period Forecast Prior
Wednesday, Apr 14
7:00 MBA Purchase Index w/e 283.6
7:00 MBA Refi Index w/e 3068.8
8:30 Import prices mm (%) Mar 1.0 1.3
8:30 Export prices mm (%) Mar 1.0 1.6
12:00 Powell Q&A *

By Matthew Graham , dated 2021-04-14 10:09:13

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Courtesy of Mortgage News Daily

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