Today's first chart is really uncanny--well, perhaps if you're some sort of technical analysis nerd, or just some guy named Matt who writes about technical analysis sometimes.  We can stop short of uncanny and simply say it's fairly interesting.  Why?  Because, bond markets have done generally the same thing at this time of year on each of the past 5 years.

Unlike those cool sounding technical studies that are named after someone or something (Bollinger Bands, Elliot Waves, Andrews Pitchfork, etc.), this sort of "history repeating" development doesn't really have a name.  Even so, it's no less relevant from a technical perspective if bonds have generally done the same thing 5 years in a row!  So what have they done?  See for yourself.  

2018-2-25 open2

So we have a notable uptick in yields for 1-2 weeks that begins within a few days of March 1st.  Does that pretty much mean we're doomed this week?  Not necessarily!  That's the wonderful and terrible thing about all of the tea-leaf reading associated with market analysis: if there were really a way to know what's coming down the pike with certainty, traders would figure it out, trade it in advance, and the crystal ball would suddenly be unreliable again.  Analysts just like to point this stuff out to hold your interest (OK, so we actually point it out to arm you with an array of pros and cons so that you're better able to formulate your own strategy based on what matters most to you).  

All that having been said, there is definitely a more mainstream case to be made for resistance in the short term.  For instance, if we were to chart 10yr yields in hourly candlesticks, we'd see that Friday was the first time since mid-January that the "slow stochastic" (a more conservative momentum metric) crossed into overbought territory.  The last time it did so, it was a cue for a reversal toward higher yields.

2018-2-25 open3

On a positive note, the same chart above also shows yields piercing the ascending trendline for the first time this year WITHOUT help from a massive stock crash.  In that sense, it's making the most compelling case yet for at least a temporary ceiling.  The daily candlestick chart below also suggests there's some potential in shorter-term momentum studies, even though we still need the longer-term momentum metric at the bottom to confirm the shift.

2018-2-25 open1

I don't want you to read any of the above as necessarily bullish or bearish.  I mean, you can do what you like, but my takeaway is simply this: "ahhh... yet another chance for bonds to try to bounce.  In some ways, it's more compelling than several of the previous bounce attempts, but I'd expect the attempts to look more and more compelling each time they're beginning from another multi-year high yield."

The fact is that a lot can happen at the end of February simply because the month-end trading process is condensed.  Just imagine a grocery store closing a few hours earlier than normal but the same number of shoppers need to get whatever they need to get for the night.  It's not necessarily bad or good--just busier and potentially more volatile.  

We'll also get Jerome Powell's first monetary policy testimony to Congress this week (House on Tuesday at 10am and Senate on Thursday at the same time).  This doesn't HAVE TO be a market mover if Powell basically comes across more or less like Yellen.  I'm also not sure who we could get any more clarity on the overall stance of the Fed.  But the fact remains that Powell is now the Fed Chair and the Fed Chair's comments at these testimonies always have the potential to cause a reaction. 

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
99-26 : +0-00
10 YR
2.8587 : -0.0123
Pricing as of 2/26/18 4:30AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Feb 26
10:00 New home sales chg mm (%)* Jan 3.2 -9.3
10:00 New home sales-units mm (ml)* Jan 0.645 0.625
Tuesday, Feb 27
8:30 Nondefense ex-air (%)* Jan 0.5 -0.6
8:30 Durable goods (%)* Jan -2.2 2.8
9:00 CaseShiller 20 yy (% ) Dec 6.3 6.4
9:00 Monthly Home Price yy (%) Dec 6.5
10:00 Consumer confidence * Feb 126.3 125.4
Wednesday, Feb 28
7:00 Mortgage Market Index w/e 372.9
8:30 GDP Prelim (%)* Q4 2.5 2.6
9:45 Chicago PMI * Feb 64.6 65.7
10:00 Pending Home Sales (%) Jan 0.4 0.5
10:00 Pending Sales Index Jan 110.1
Thursday, Mar 01
8:30 Consumer Spending (Consumption) (%) Jan 0.2 0.4
8:30 Core PCE (m/m) (%)* Jan 0.3 0.2
8:30 Personal Income (%)* Jan 0.3 0.4
8:30 Jobless Claims (k) w/e 229 222
10:00 ISM Manufacturing PMI * Feb 58.7 59.1
10:00 Construction spending (%)* Jan 0.3 0.7
Friday, Mar 02
8:45 ISM-New York index * Feb 767.9
10:00 U Mich 1Yr Inf Final (%) Feb
10:00 U Mich Sentiment Final (ip) Feb 99.5 94.4
10:00 U Mich 5-Yr Inf Final (%) Feb