Today's session is emblematic of most of the rest of the week. There is no scheduled economic data and trading is just as likely to be driven by position squaring ahead of next week's FOMC Announcement as anything else. That tends to suggest a certain randomness in determining the direction of trading, and a reasonable amount of momentum until technical levels are hit.
As always, there are several way to look at the technicals. In general, the best case to be made is that both MBS and Treasuries are trading near short-term resistance. In other words, the deck is slightly stacked against them and any strength to start the week would be a good sign for the rest of the week.
Even if we lose some ground today, the longer term chart (just Treasuries this time) is still constructive and leaves at least 7bps of weakness in 10yr yields before they'd cross a negative line in the sand (the middle blue line in the following chart). Other technical studies are still constructive, even if only just.
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