It's no wonder so many in the financial world play golf as the words of wisdom are so often interchangeable.  Spreads, prices, our emotions, you name it--all are operating in ranges as we progress into the afternoon.  To wit:

  • MBS spreads have neither moved tighter than last night's tights nor wider than Friday AM wides, but have shown reactivity at both levels
  • PRICES along 4.5's have not moved higher than 100-02 despite bouncing there several times, nore have moved lower than yesterday's close.  Additionally, prices have not moved out on either side of 2SD / 21MMA BBand.  Huh?  If we take a moving average of the last 21 minutes and plot is on the chart and then draw an upper and lower line 2 standard deviations away from the moving average, the actual price curve has not crossed those outer boundaries.  Just an indication of "rangeboundedness."  The technically brave can click here for an example.
  • emotions?  Ha!  Don't get us started on that one...

As for more readily absorbable pictures, look at the striking regularity with which 4.5's have bumped their head at 100-02!

And there's so much more to talk about with respect to this chart....

  • Of course, there's the obligatory triangle formed using the aforementioned 100-02 line and a "higher low."  Taken in and of itself, it doesn't suggest much until prices cross one of the lines.  Combined with the following points, it's suggesting range-bound stability into the close.
  • Notice the choppiness in tsy's coincides with choppiness in MBS.  This is visual evidence of our connectedness to the yield curve.  The 10 yr is likely to encounter more and more resistance as it moves closer to 3.5.  So far, the 3.54 to 3.55 range feels "floorish" today. 
  • Take a look at the dotted red line at PAR on the MBS chart.  This has been the target that has invited buying when prices have been below and conversely inviting them back down when they've risen to the 100-02 level.  "Gravity" seems to fit...
  • At least to the book close today, this gravity should remain, putting us out around PAR, a little above in the case of an upside triangle breakout and a bit below for the opposite.

Intraday floaters are good.  Reassing gains at lock cutoff as always.  More in depth discussion on the rest of the week to come in the closing post.  Whether or not our current time "in the range" improves our game over the weekend remains to be seen...