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MBS Week Ahead: Can Bonds Confirm The Breakout?

Posted To: MBS Commentary

A resilient performance at the end of last week means that bonds have easily staked a claim to a sideways range that's been intact for more than 2 months now. We had been following a slightly negative trend in Treasuries (seen in the yellow lines below), but even that trend was completely contained by the prevailing sideways range. As of Friday, 10yr yields were making a case to part ways with the negative trend by ending the day below the yellow line for the first time since the trend began in mid April. The bottom portion of the chart has a slow stochastic oscillator--a technical overlay that helps track momentum. As far as stochastics are concerned, negative momentum topped out and reversed course last week, but there's a catch. There are two catches actually. First off, stochastics...(read more)