Coincidentally, yesterday's Day Ahead talked about "pivot points."  Now today, we see a prime example of a pivot point in action.  Although I labeled it as 2.215% yesterday, let's simplify the conversation by using 2.22% today.  

A hallmark of "pivot" behavior is the tendency to act as both a floor and a ceiling.  A pivot is a level that has been historically more likely to turn bonds away as opposed to letting them pass.  In other words when 10yr yields have approached 2.22% from either direction recently, they've been more likely to bounce than to break through.  The last 2 days have been no exception.

With this morning's gains, it's tempting to conclude the 2.22% pivot will act as a ceiling in the same sort of way it did back in June, but as the chart suggests, we'd want to see a break below 2.18% before getting our hopes up.

2017-8-23 open

Light participation among traders and generally-lower trading volumes mean we can't read as much into seemingly relevant market movements.  Even though the word on the street is that markets are fairly well tuned out for the Jackson Hole events over the next 2 days, it's still the biggest potential market mover of the week.  Thus, it's a bit too early to jump to conclusions.  

Today is light on relevant economic data.  New Home Sales are out at 10am ET and that's the biggest-ticket report in terms of scheduled data.  This report doesn't tend to be a big market mover and could easily be Trumped by political headlines or other unexpected news that has an outsized impact in these thinly-traded Summertime market conditions.


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 3.5
103-11 : +0-04
Treasuries
10 YR
2.1852 : -0.0298
Pricing as of 8/23/17 9:24AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Wednesday, Aug 23
7:00 Mortgage Market Index w/e 419.1
7:00 Mortgage Refinance Index w/e 1455.9
7:00 MBA Purchase Index w/e 233.8
10:00 New home sales chg mm (%)* Jul 0.3 0.8
10:00 New home sales-units mm (ml)* Jul 0.612 0.610