• bond markets still holding the range, but pressure is increasing
  • momentum studies are close to confirming negative shift
  • Tradeflows, technicals, and related markets (read: stocks/oil/Europe) continue to trump econ data

Although Friday's trading session offered tempting positivity (i.e., we rallied after 5 sessions of relative weakness), yesterday showed that the gains were merely incidental--more to do with position-squaring ahead of a volatile weekend.  In other words, Friday was good because traders were taking their negative chips off the table, but they were only doing that as a short-term strategy to avoid the risk of a big move over the weekend.  When markets didn't go crazy over the weekend, traders put the negative chips back on the table and we're right back to the same old line in the sand.

(Note: trading positions can be thought of like betting with poker chips.  The key difference from real life is that there are positive and negative bets.  In other words, you can bet on rates rising or falling.)

The specific line, in this case, corresponds well with the 10yr range boundary we've been tracking at 1.80.  At the moment, this is also the 21-day exponential moving average.  Breaking above it would mean confirmation for negative technical momentum and holding below would see those technicals start to break down.

2016-4-19 techs

Even if 1.80 breaks, it's not the end of the world--more like the alarm that says the end of the world could be coming.  It would take a convincing break above 1.84 for the technical picture to look its worst.

It's these technical considerations (the math-based models/charts that track trends, momentum, and key trading levels), along with the aforementioned tradeflow considerations (i.e. traders' strategy with the "poker chips" referenced above) that will drive bond markets as opposed to the traditional considerations like economic reports and other fundamentals.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
102-20 : +0-01
10 YR
1.7760 : +0.0050
Pricing as of 4/19/16 9:22AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, Apr 19
0:00 Roll Date - Ginnie Mae 30YR *
8:30 Housing starts number mm (ml)* Mar 1.170 1.178
8:30 Building permits: number (ml)* Mar 1.200 1.177