As bonds have recovered from the high yields seen in March, the tendency has been for rally weeks to end with a bit of defensiveness on Fridays.  This is most common on the week or two following a break below prevailing technical resistance.  In other words, yields had been struggling to break through a certain floor, and if they subsequently broke that floor and rallied further, the week of the breakout would see a pull-back.  The body of evidence is limited to only 3 obvious examples, but the pull-back has happened in roughly the same way every time.  

20210716 open1.png

If early trading is any indication, today is off to a similar start, but there really aren’t any implications beyond the intraday time frame.  It would actually be  a bullish turn of events to see yields simply hold under 1.36%.  In fact, considering trading levels 2 weeks ago, anything under 1.44% would technically act to consolidate the recent gains (and 1.44% would be a surprising amount of weakness today).  On the bullish side of the coin, anything near (or below) 1.30% would be a ringing endorsement of the new, lower rate range.


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 2.0

101-14 : -0-04

Treasuries

10 YR

1.3220 : +0.0250

Pricing as of 7/16/21 9:49AMEST

Tomorrow’s Economic Calendar

Time Event Period Forecast Prior
Friday, Jul 16
8:30 Retail Sales (%)* Jun -0.4 -1.7
10:00 5yr Inflation Outlook (%) Jul 2.8
10:00 1yr Inflation Outlook (%) Jul 4.2
10:00 Consumer Sentiment Jul 86.5 85.5
10:00 Business Inventories (% ) May 0.5 -0.2

By Matthew Graham , dated 2021-07-16 09:49:06

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Courtesy of Mortgage News Daily

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