The basic candlestick or bar chart that the average bond analyst uses to track 10yr Treasury yields is doing a good job of capturing the current opposing forces in rates.  On the one hand, the combination of economic data, NAFTA 2.0, and Fed comments (among other things) makes a logical case for higher rates.  This is easily seen as the pervasive series of "higher lows" over the past 2 months.

On the other hand, doubts about the sustainability of lofty economic numbers and doubts about the market's ability to thrive with 10yr yields over 3.25% make a case for support.  This can be seen in the less-developed series of "lower highs" leading back from the long-term high 2 weeks ago. 

The result is the typical triangle--a consolidation pattern where the higher lows and lower highs eventually collide.  The takeaway from such triangles can be as simple as saying "oh look, there's a triangle.  There must be some indecision around these levels!" or as presumptuous as "rates are clearly storing energy in anticipation of a big breakout."

2018-10-22 open

Either way, the triangle will have to be broken early this week.  It wouldn't be a surprise to see an underwhelming follow-through, given the sparsely populated economic calendar.  Bigger-ticket reports don't show up until the 2nd half of the week and even then, the reports aren't the biggest market movers recently.

3.18% (where we're starting out today) has been a short-term pivot point of some significance.  It's been more willing to act as a ceiling recently, but is being approached as a floor coming down from Friday's higher levels.  If it results in a bounce toward higher rates, 3.21-3.22% would be the next level to watch, based on last week's highs.  If rates can continue to rally, 3.13% remains the level to beat.


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 4.0
99-30 : +0-02
Treasuries
10 YR
3.1826 : -0.0194
Pricing as of 10/22/18 8:44AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Wednesday, Oct 24
7:00 MBA Purchase Index w/e 224.0
7:00 Mortgage Refinance Index w/e 838.1
9:00 Monthly Home Price yy (%) Aug 6.4
9:00 Monthly Home Price mm (%) Aug 0.2
10:00 New home sales chg mm (%)* Sep -1.4 3.5
10:00 New home sales-units mm (ml)* Sep 0.625 0.629
13:00 5-Yr Note Auction (bl)* 39
Thursday, Oct 25
8:30 Nondefense ex-air (%)* Sep 0.5 -0.9
8:30 Durable goods (%)* Sep -1.0 4.4
8:30 Jobless Claims (k) w/e 214 210
10:00 Pending Home Sales (%) Sep -0.1 -1.8
13:00 7-Yr Note Auction (bl)* 31
Friday, Oct 26
8:30 GDP Advance (%)* Q3 3.3 4.2
10:00 U Mich 1Yr Inf Final (%) Oct 2.8
10:00 U Mich Sentiment Final (ip) Oct 99.0 99.0
10:00 U Mich 5-Yr Inf Final (%) Oct 2.3