In the realm of market commentary, technicals are a vastly overused explanation for past movement, let alone for the prediction of future movement. In this week's case, however, the consolidation pattern in bond yields offers one of the only ways to understand the otherwise inexplicable selling pressure. Long story short, the weakness was just the right size and pace to complete the pattern heading into events with more power to inspire definitive reactions and lasting momentum.
Modestly weaker overnight but recovering a bit. MBS down 1 tick (.03) and 10yr up 1.2bps at 4.11
10:59 AM
10yr yields are up 3bps at 4.128. MBS are down only 3 ticks (.09) on the day.
12:20 PM
MBS down an eighth and 10yr up 3.1bps at 4.129
Lock / Float Considerations
Rates broadly consolidated ahead of Fed week. The modest bump toward higher levels creates a short-term opportunity for risk takers, but not one that has an especially attractive reward. In order to see more meaningful moves, we'll need to get the more meaningful data and events. These start on Tuesday and go through the December 16th jobs report.
