Volume and volatility have left the building this afternoon as markets aren’t keen on making any big movements ahead of tomorrow’s Employment Situation (NFP). MBS Continued a 3rd day of trading the same fractal where prices begin the day in a wide/volatile pattern, consolidate, break higher, and return to something around 101-26 by the close. All off the preceding can be seen in the live chart below from the MBS Live Dashboard
To reiterate the extent to which MBS are seeking out 101-26, here’s a longer term chart of Fannie 3.5’s:
To reiterate the extent to which no one is taking any big risks this afternoon, here’s a chart of SP’s and TSY’s following each other all day and both trading well within the morning range this afternoon.
SP’s in particular are smack dab in at the apex of the epic triangle recently broken, as if to suggest a big beat on NFP, and they’d be ready to move higher–European headlines be damned.
But are 10yr yields ready to move higher? Maybe, maybe not. Certainly we wouldn’t want to rely on these 2.11-ish levels as a be-all-end-all sort of support level, but they certainly were for the month of november and markets have as-yet been unwilling to let yields casually drift much higher. That said, a big beat on NFP would likely do the trick, while anything less (if unaccompanied by bond-negative headlines out of Europe) would be harder pressed to do so.