Thursday , 21 January 2021

MBS RECAP: Meager Gains Intact Following Afternoon Swoon

By Matthew Graham

Posted To: MBS Commentary

Anxiety and anticipation are in full supply as markets approach Thursday’s exceptionally important ECB news. Last Friday, this anxiety took the form of liquidation in bond markets. The near-term limits were seemingly found (right around 1.70% in terms of 10yr yields) and it was time to begin a broader consolidation ahead of the ECB news. If you’re a 10yr yield that just put in a solid resistance (floor) bounce at 1.70, what’s the most likely target for a support (ceiling) bounce? 99 out of 100 10yr yields that I asked said 1.84-ish. I wasn’t surprised. This is the big-picture technical level that dominated the discussion from mid 2011 to mid 2013. No other level is a better threshold for the ‘golden era’ of US bond market trading levels and volatility (really low rates…(read more)

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