Despite a fairly perfect bounce yesterday, the trend-lines acting as floors in stocks and bonds have given way overnight, even if only in somewhat underwhelming fashion.  For instance, compared the 3.06 line in the sand, 10yr yields began the day at 3.04 and are already up a bit from there.  The S&P is only 20-30 points below its supportive line (not a big move for the S&P these days).  Nonetheless, a break is a break!

2018-11-20 open

The biggest question is whether or not we should read much into this considering my typical effort to convince you that Thanksgiving week market movement should be taken with a grain of salt.  In fact, I do think we CAN read something into it.  

Granted, there's no way to confirm a definitive, big-picture shift.  Absent a much sharper sell-off in stocks, I think bonds will be a bit more methodical about accepting that the 2+ year rising rate environment is finally ending.  I don't think traders currently know if that environment will end abruptly or if we'll just enter a volatile, sideways trend between now and whenever things get really bad for the economy.  

In short, I think what we can read into these technical breakouts is that the conversation about a big-picture shift in longer-term trends has been opened. It's not necessarily the first time--just the most recent.  BUT, every time the conversation is opened, and when it's opened at higher levels, AND when it coincides with stocks looking shifty, it gets more and more serious.   In that regard, this is the most promising opening of said conversation. 

For the record, if you want to visualize the "opening of the conversation," we're really just talking about times where bond yields have broken below recently established trendlines, unlike a majority of 2018 (indeed, we'd still need to break that gigantic trendline for things to get "real").

2018-11-20 open

Send me your questions and we can continue to discuss!

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 4.0
100-07 : -0-01
10 YR
3.0540 : -0.0050
Pricing as of 11/20/18 9:34AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, Nov 20
8:30 Build permits: change mm (%)* Oct 1.7
8:30 Housing starts number mm (ml)* Oct 1.225 1.201
8:30 House starts mm: change (%) Oct -5.3
8:30 Building permits: number (ml)* Oct 1.267 1.270