Bond markets are in the throes of their worst uptrend in yields since the November presidential election.  Granted, trading levels are still roughly in the middle of the post-election range, but that's precious little consolation next to the past 3 weeks of pain.

Speaking of words that sound like consolation, let's talk about consolidation.  Yesterday saw a well-behaved consolidation pattern.  Technicians also refer to these patterns as "triangles" because the lines connecting the highs and lows converge like 2 sides of a triangle.  I've never much liked the "triangle" term (because where's the third side?!) but it's a pretty standard part of technical analysis jargon.

In yesterday's case, the triangle was upwardly-sloped.  In other words, the lower line was ascending and the upper line was either flat or ascending depending on whether you start with the first trades of the day or the post 10am highs.  Either way, these upwardly-sloped triangles have a better-than-50% chance to precede more selling.  That appears to be the case so far today.

2017-10-3 open

In the bigger picture, the trend remains unfriendly.  We COULD see our first show of support sometime soon from the long-term trendline seen in the following chart, but if that doesn't hold, we'd be looking at 2.40-2.42 as the next zone of potential support.  Either way, the trend should be assumed intact until it's convincingly broken, AND until momentum indicators like the MACD forest suggest that the breakout isn't simply a head-fake.  March/April 2017 provide a good example of a head-fake coming in the other direction, and it wasn't until MACD got closer to the 'zero' line that bonds finally shifted appreciably in the other direction.

2017-10-3 open2

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
103-02 : -0-01
10 YR
2.3551 : +0.0181
Pricing as of 10/3/17 9:04AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, Oct 03
9:45 ISM-New York index * Sep 748.8