NOTE: Bond markets will be closed on Monday in observance of Martin Luther King Jr. Day. Scheduled MBS Commentary will resume on Tuesday morning.
Today served the purpose we were hoping to see it serve. Volume fell, prices rose, and we were left with the sense that Thursday was in fact the last day of the current week in terms of "active" trading and participation. This makes Thursday's sell-off nominally more palatable in that we can infer an extra bit of defensiveness ahead of an extended weekend. Whether or not this actually had a bearing on yesterday's weakness, today's moderate bounce back leaves the recent countertrends intact. In other words, there are long term trends leading toward higher rates. The boundaries of those were stretched to the limit earlier this month and we've since been trending back toward lower rates, with yesterday's sell-off stretching that counter-trend to its own limits. No breakouts though. Broader suggestion is for choppy, sideways indecision to continue into debt-ceiling debate.
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