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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.Winning Streak Snaps As MBS Close At The Lows
- Going out at lows of the day with 4.5's down 3 ticks to 101-00
- 10yr Tsy at high yield of day just under 3.68
- Moderate gains in Dow and Nasdaq, S&P unchanged
- Big raft of data + Treasury Supply was just a bit too bearish for bonds today
- Still... Not a huge affair in terms of volume. MBS about half of normal.
Kind of a medium term chart tonight but a lot going on with MBS trends, so the discussion will be almost exclusively on the top section of the following chart:
[Image or graph removed from email. View full article with images]
Many many colors in the MBS chart, eh? Here's what they are:
WHITE LINE: can either be thought of as one of two things: pretty dang close to 101-00 or an inflection point over the past two weeks. Both are accurate. It's moderately supportive vs. the pessimism that the next two sets of lines seem to suggest
YELLOW LINES: Trend Channel of the recent rally that began on Tuesday, though support for the trend channel goes back into Monday. This is bearish for MBS as we had a test (attempted breakout, basically), of the top line that failed, followed by prices immediately moving to test the bottom line and breaking through. Low volume mitigates the technical significance of this move to a certain extent though.
RED LINES: Trend Channel for today's sell off. No breakout of this channel is necessary for it to be bad news for bonds. Furthermore, when prices broke the yellow line today, they had a big bounce that coincided with both the yellow uptrend and the red downtrend. After falling out of the rallying channel, they tried to come back but bounced again at a rough intersection of the two trends.
When prices fall on or close to more than one salient technical pattern, it merely adds a bit of credence to what we're seeing. In and of itself, the way that prices broke the yellow line was a good example of using that line as a pivot point (in that it bounced at first using the line as floor, then after breaking through, bounced again, this time using the line as a ceiling). The fact that this fairly common inflectional behavior coincides with adherence to a completely separate trend channel (the red one) makes the technical reading, at least in terms of trends, a bit more bearish.
Whether or not that's bearish enough to suggest higher rates tomorrow is not as much of a certainty as these pretty charts want you to believe though. The volume is a fairly big deal, and treasuries still seem very much on the cusp of their recently lower-in-yield range, but with no definitive back up. Stocks too, were flat on the day, setting up either for a continued rally or a move back into reality (dow was up a bit, but S&P is preferred for a technical read due to breadth). But even with the low volume and 101-00 inflection point caveats, it's more locky than floaty tonight, with plenty of uncertainty on the data-less quadruple witching options/futures expirations tomorrow.
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Winning Streak Snaps As MBS Close At The Lows
- Going out at lows of the day with 4.5's down 3 ticks to 101-00
- 10yr Tsy at high yield of day just under 3.68
- Moderate gains in Dow and Nasdaq, S&P unchanged
- Big raft of data + Treasury Supply was just a bit too bearish for bonds today
- Still... Not a huge affair in terms of volume. MBS about half of normal.
Kind of a medium term chart tonight but a lot going on with MBS trends, so the discussion will be almost exclusively on the top section of the following chart:
Many many colors in the MBS chart, eh? Here's what they are:
WHITE LINE: can either be thought of as one of two things: pretty dang close to 101-00 or an inflection point over the past two weeks. Both are accurate. It's moderately supportive vs. the pessimism that the next two sets of lines seem to suggest
YELLOW LINES: Trend Channel of the recent rally that began on Tuesday, though support for the trend channel goes back into Monday. This is bearish for MBS as we had a test (attempted breakout, basically), of the top line that failed, followed by prices immediately moving to test the bottom line and breaking through. Low volume mitigates the technical significance of this move to a certain extent though.
RED LINES: Trend Channel for today's sell off. No breakout of this channel is necessary for it to be bad news for bonds. Furthermore, when prices broke the yellow line today, they had a big bounce that coincided with both the yellow uptrend and the red downtrend. After falling out of the rallying channel, they tried to come back but bounced again at a rough intersection of the two trends.
When prices fall on or close to more than one salient technical pattern, it merely adds a bit of credence to what we're seeing. In and of itself, the way that prices broke the yellow line was a good example of using that line as a pivot point (in that it bounced at first using the line as floor, then after breaking through, bounced again, this time using the line as a ceiling). The fact that this fairly common inflectional behavior coincides with adherence to a completely separate trend channel (the red one) makes the technical reading, at least in terms of trends, a bit more bearish.
Whether or not that's bearish enough to suggest higher rates tomorrow is not as much of a certainty as these pretty charts want you to believe though. The volume is a fairly big deal, and treasuries still seem very much on the cusp of their recently lower-in-yield range, but with no definitive back up. Stocks too, were flat on the day, setting up either for a continued rally or a move back into reality (dow was up a bit, but S&P is preferred for a technical read due to breadth). But even with the low volume and 101-00 inflection point caveats, it's more locky than floaty tonight, with plenty of uncertainty on the data-less quadruple witching options/futures expirations tomorrow.
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