• Bond rally following yesterday's Fed brings trading levels right back to the top of the previous range
  • holding ground today with modest gains would be great
  • breaking back below 10yr yields of 1.80 would be better
  • simply avoiding the early March precedent would be good

What is the "early March precedent?"  March 1st marked the beginning of a sell-off that was very similar in shape, intensity, and technical significance to the sell-off that began on April 20th.  Both sell-offs put in 4 more days of weakness after breaking above the 21-day moving average (middle line in the Bollinger Bands overlaid on the candlesticks in the following chart).  Both sell-offs then encountered a strongly positive day.  In early March, it was the 8th.  In the current sell-off, it was yesterday's Fed day.  

2016-4-28 Early March Precedent

As the chart shows (and as you may well remember), the early March bounce was merely a 1-day head-fake before bonds resumed their weaker ways.  This time around, avoiding a similar fate--even if it only means holding steady--would be a welcome result.  If 10yr yields can manage to hold under 1.84, it would be even better.  The best case scenario would be a break under 1.80, but that would require a fairly strong rally today, which could be a tall order after yesterday's strong move.

Key data is limited to GDP at 8:30am.  This is the first look at Q1 numbers and the median forecast currently stands at 0.7.  


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
102-10 : +0-01
Treasuries
10 YR
1.8490 : -0.0110
Pricing as of 4/28/16 8:23AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Thursday, Apr 28
8:30 GDP Advance (%) Q1 0.7 1.4
8:30 Initial Jobless Claims (k)* w/e 260 247
13:00 7-Yr Note Auction (bl)* 28