• Technicals were looking good late last week
  • But some risk that month-end trading was painting a rosy picture
  • we'll find out this week!

Last week marked the first convincing attempt on the part of the bond market to break the uptrend that began on April 8th.  That trend carried 10yr yields from just under 1.7 to 1.94 before the Fed Announcement finally put an end to it.  But with the Fed Announcement on Wednesday and month-end on Friday, was that enough time to 'confirm' the shift that some of the technical indicators suggested?

First of all, let's break down what we mean by a "technical shift."  Simply put, these are tipping points at which various technical studies (math and rules applied to market movement designed to assess momentum and potential shifts in trends) hit a certain level to indicate the end of an old trend, the start of a new trend, or simply to suggest "buy/sell" signals from a trading standpoint.  

For instance, in the following chart, the lower 3 panes all have positive shifts for the reasons marked.  The upper pane, however, suggests a more equivocal stance, with 10yr yields still having trouble breaking below the middle Bollinger Band (also the  21-day moving average).

2016-5-2 Treasury Techs

Long story short, we were hesitant to declare a positive shift last week without reservation and we expect this week to bring enough information and market movement to clear things up.  Major data points include the two ISM reports today and Wednesday, and of course, NFP on Friday.  

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
102-13 : -0-01
10 YR
1.8390 : +0.0200
Pricing as of 5/2/16 9:31AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, May 02
10:00 ISM Manufacturing PMI * Apr 51.4 51.8
Wednesday, May 04
7:00 Mortgage Market Index w/e 505.4
8:15 ADP National Employment (k)* Apr 195 200
8:30 International trade mm $ (bl)* Mar -41.5 -47.1
10:00 ISM N-Mfg Bus Act * Apr 59.2 59.8
10:00 ISM N-Mfg PMI * Apr 54.7 54.5
Thursday, May 05
8:30 Initial Jobless Claims (k)* w/e 260
8:30 Continued jobless claims (ml)* w/e 2.133
Friday, May 06
8:30 Non-farm payrolls (k)* Apr 200 215
8:30 Private Payrolls (k)* Apr 190 195
8:30 Unemployment rate mm (%)* Apr 5.0 5.0