This email was sent to you by:
Anonymous |
|
Mortgage News Daily
|
Message: YOUR MESSAGE HERE |
Email alerts, such as this one, are a
free service provided by Mortgage News Daily. If you would like to receive an alert when important news breaks please
register to join our community.
Register with Mortgage News Daily - Registration is free and offers many benefits.
Manage your Email Alerts - Once you're registered, you can manage all MND email alerts on one page, turning subscriptions on or off with one click.
About MND:
Mortgage News Daily combines the expertise of some of the housing industry's leading minds with the power of social media to offer an always lively, constantly evolving web community. MND communicates breaking news, streams video, and provides expert opinion and commentary to a community of interested market professionals and curious consumers.MBS CLOSE: Why You Can Still Be Afraid Of Further Losses
Two days... Two catastrophic beatings for bonds. And I keep looking up at the stock chart and it still looks like the top of Bart Simpson's head... The S&P has a lot of 1's in it, and the Dow seems to be 10,4xx every time I glance at it over the past few days. Stocks continue to hold relatively sideways while bonds put bullet after bullet in their heart of hearts.
That's right folks! How the mighty have fallen! Not quite as bad as yesterday, but the 4.5 was still down 18 ticks to 100-00 on the nose. Once again, the lower one went in the stack, the worse it got (almost like a convexity problem. Hmmm... I'll have to look into that) as 4.0's were down 22 ticks to 96-28. Folks, we're down 4 HANDLES IN LESS THAN A MONTH! (100 to 96). As we mentioned earlier, last bout of selling this steep and precipitous was Black Wednesday.
Solace crept in this AM when PAR actually held up as some sort of support level in conjunction with 3.76 in tsy's. MBS were through that support briefly after the noon hour, but rallied enough so that late day selling left 4.5's right on the legend itself at 100-00. 3.76 looked stronger with 2 maybe 3 tests in the AM and a third just before the close that, unlike MBS, actually came early enough that we could see yields turn the corner by couple thousandths before 5pm.
[Image or graph removed from email. View full article with images]
Nothing to say about stocks yet. Nothing definitive has happened here.
[Image or graph removed from email. View full article with images]
But don't forget the stock chart, just the same, as it's about to be referenced by way of context. As are most of the coins in my purse of MBS analysis, this one has two sides. Though I don't anticipate a 280+ yield curve to last for long or plan on this sort of yield spike going uncorrected, neither would I rule out further weakness in days to come. So the question becomes about TIMING (isn't is always?). We agree that given the status quo, bonds are likely to see a correction, and on the optimistic side of the coin, there are some reasons to hope for it before the end of the year.
Here's a one month view of MBS and Tsy's. Note the parallel trendlines. Once prices (or yields as the case may be) reach one of the trendlines, they must either correct back towards the center of the trend channel, or break the trend. In that sense, today suggests itself as a "test" of the weaker parts of the trend channel. Consequently, if a correction is coming, tomorrow may be the day.
[Image or graph removed from email. View full article with images]
But note ye merry gentlemen and ladies, that the aforementioned puncturing of the trend that occurred today in tsy's, did so on higher volume. This is classic technical analysis and constitutes quite a bit of "chapter 1's" in various TA bibles. Simply put, when we consider trends for potential changes, probably the most significant requirement is that the breakage or "test" occurs "with volume." And sadly, that's what we have in the chart above. But getting back to a hint of optimism, only one day of breakage does not a trend shift make! We may have seen a breakout on volume today, but it would still be up to tomorrow's volume and action to CONFIRM that breakout.
And in that sense, it's probably a good thing that stocks could STILL be seen to be bound in a range of their own. I believe it was AQ earlier today who mentioned that stocks are getting close to their profit taking levels as bonds near their short covering levels. If data plays ball, we could see that tomorrow. I don't really care if it snows in the 2 days leading up to Christmas, but I would gladly croon "I'm dreaming of anything-but-a-red Christmas..." There's hope for that at least, but if you're not looking at the chart above no one could blame you for being afraid of further losses.
More from MND:
If you would like to opt-out of receiving email forwards from this person please click here to remove your email address.
This email was sent to you by:
|
Mortgage News Daily
|
 |
Anonymous Anonymous |
|
Message:
YOUR MESSAGE HERE
MBS CLOSE: Why You Can Still Be Afraid Of Further Losses
Two days... Two catastrophic beatings for bonds. And I keep looking up at the stock chart and it still looks like the top of Bart Simpson's head... The S&P has a lot of 1's in it, and the Dow seems to be 10,4xx every time I glance at it over the past few days. Stocks continue to hold relatively sideways while bonds put bullet after bullet in their heart of hearts.
That's right folks! How the mighty have fallen! Not quite as bad as yesterday, but the 4.5 was still down 18 ticks to 100-00 on the nose. Once again, the lower one went in the stack, the worse it got (almost like a convexity problem. Hmmm... I'll have to look into that) as 4.0's were down 22 ticks to 96-28. Folks, we're down 4 HANDLES IN LESS THAN A MONTH! (100 to 96). As we mentioned earlier, last bout of selling this steep and precipitous was Black Wednesday.
Solace crept in this AM when PAR actually held up as some sort of support level in conjunction with 3.76 in tsy's. MBS were through that support briefly after the noon hour, but rallied enough so that late day selling left 4.5's right on the legend itself at 100-00. 3.76 looked stronger with 2 maybe 3 tests in the AM and a third just before the close that, unlike MBS, actually came early enough that we could see yields turn the corner by couple thousandths before 5pm.
Nothing to say about stocks yet. Nothing definitive has happened here.
But don't forget the stock chart, just the same, as it's about to be referenced by way of context. As are most of the coins in my purse of MBS analysis, this one has two sides. Though I don't anticipate a 280+ yield curve to last for long or plan on this sort of yield spike going uncorrected, neither would I rule out further weakness in days to come. So the question becomes about TIMING (isn't is always?). We agree that given the status quo, bonds are likely to see a correction, and on the optimistic side of the coin, there are some reasons to hope for it before the end of the year.
Here's a one month view of MBS and Tsy's. Note the parallel trendlines. Once prices (or yields as the case may be) reach one of the trendlines, they must either correct back towards the center of the trend channel, or break the trend. In that sense, today suggests itself as a "test" of the weaker parts of the trend channel. Consequently, if a correction is coming, tomorrow may be the day.
But note ye merry gentlemen and ladies, that the aforementioned puncturing of the trend that occurred today in tsy's, did so on higher volume. This is classic technical analysis and constitutes quite a bit of "chapter 1's" in various TA bibles. Simply put, when we consider trends for potential changes, probably the most significant requirement is that the breakage or "test" occurs "with volume." And sadly, that's what we have in the chart above. But getting back to a hint of optimism, only one day of breakage does not a trend shift make! We may have seen a breakout on volume today, but it would still be up to tomorrow's volume and action to CONFIRM that breakout.
And in that sense, it's probably a good thing that stocks could STILL be seen to be bound in a range of their own. I believe it was AQ earlier today who mentioned that stocks are getting close to their profit taking levels as bonds near their short covering levels. If data plays ball, we could see that tomorrow. I don't really care if it snows in the 2 days leading up to Christmas, but I would gladly croon "I'm dreaming of anything-but-a-red Christmas..." There's hope for that at least, but if you're not looking at the chart above no one could blame you for being afraid of further losses.
If you would like to opt-out of receiving email forwards from this person please click here to remove your email address.