Saturday , 23 January 2021

MBS RECAP: Bonds End Weaker as Stocks Threaten a Breakout

By Matthew Graham

Posted To: MBS Commentary

It’s hard to fault the bond market for any trading over the past several days. The data and the movement in other markets have both suggested bond market weakness fairly clearly. Despite that, the weakness has been reasonably well contained. For example, 2.75% in 10yr yields has been our best case ceiling –one we began to discuss on the initial bounce last Friday. As of this afternoon, 10yr yields closed at 2.746%. All that having been said, being this close to 2.75% makes it that much easier to break . Whether or not it breaks may be as much a function of the stock market as anything. Bond yields have been quite willing to reconnect with stocks after the late-2018 disconnect. Stocks are staging near a ceiling of the their own–essentially the inflection point between the first and second…(read more)

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