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MBS Week Ahead: New Breakout or New Ceiling?

Posted To: MBS Commentary

In the week just passed, the first 4 days (and especially Tue/Thu) served as the scene for a breakout from the previous trend (seen in the yellow lines on today's chart). Investors eagerly awaited Powell's congressional testimony, with bonds leading off toward higher yields in advance (Tuesday). When Powell's prepared speech hit the wires (Wed), bonds took some solace, but Thursday's slightly stronger CPI report and terrible 30yr bond auction prompted heavy selling. By Friday, however, yields were able to maintain the same ceiling for 2 days in a row at 2.15%. In the week ahead, we'll continue assessing the 2.15% ceiling (hit again overnight) for support. After the overnight bounce, we're starting the domestic session roughly 4 bps lower. If 2.15% does end up acting...(read more)