In the day just past, bonds began the week slowly and without much conviction.  Friday's post-NFP weakness was essentially confirmed by the fact that yields held near post-NFP highs without any meaningful push back.  The consolation is that we didn't see any new highs versus Friday's levels.  There were no meaningful economic reports or market-moving headlines--only the sense that traders were waiting to see what Powell had to say in this week's congressional testimony and what the Fed had to say in the Minutes release on Wednesday.

In the day ahead, markets will continue waiting on Wednesday as the biggest day of the week in terms of potential motivation.  Today's Powell speech is merely a video feed at a Fed conference on bank stress testing.  Given the topic, there would need to be a Q&A session for Powell to be able to discuss something actionable for bond traders, and that doesn't sound likely considering he won't even be in the room.  The 3yr Treasury auction is the only other calendar item at 1pm, and it's the least relevant of this week's 3 auctions.

In the bigger, technical picture, bonds are still in the process of testing some sort of breakout.  This could be viewed as something that has already happened with respect to the positive trend of the past 3 weeks (downward-sloped yellow line in the next chart) or something that is threatening to happen if yields break and hold above 2.065.  This first chart contains hourly candlesticks which allow for a better view of the bounces along the various trend lines.

2019-7-9 open

The next chart is the typical daily candlesticks, this time with overlays for stochastic momentum oscillators.  They're far from crystal balls, but in general, when they're moving up from 'overbought' levels, it signifies momentum toward higher yields.  When there is empty space between the stochastic lines and the 'oversold' line, it signifies less resistance to the negative momentum.  For those who want to keep things simple, however, just keep an eye on the ceiling at 2.065.  If it's convincingly broken, that's a pretty obvious confirmation of a shift in recent momentum.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
100-25 : -0-01
10 YR
2.0470 : +0.0130
Pricing as of 7/9/19 9:19AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, Jul 09
8:45 Powell Speech *
13:00 3-Yr Note Auction (bl) 38