Revisiting Afternoon Charts. Bonds Weaker, Trends Hold


Just a quick post tonight, mostly to update you on how the charts that we discussed this afternoon ended up panning out by 5pm.  Long story short, the trends continue to be valid, but sadly, that merely means that MBS stopped selling off when reaching 101-00.  Quite a few reprices for the worse before the day was done, but no real damage done to the broader trends as can be seen below, beginning with the 101-00 ground-holding in 3.5’s. 

We also looked at the 2.15+ level in 10yr notes, and while it did turn out to be immensely significant from a technical perspective, yields moved in an unfriendly direction:

So both in terms of the 3pm close and the 5pm “going out” levels, chalk this up as yet another day where 10’s fail to close under 2.15+.  As you can see in the candle chart, things are really getting interesting on this little ledge.  Also note that the trading is sort of consolidating into a point near current levels over the last few sessions.

As far as that “consolidation” is concerned, similar story for SP, also consolidating in the short term, just over 1200, and also inside a range in the longer run.

Some of you have seen this already, but by way of concluding the day, here’s a recent live update from MBS Live!

Fannie 3.5’s are slightly better than levels seen during their last major bout of weakness today, which in turn is slightly better than morning levels (which themselves are slightly better than yesterday’s low). Are we seeing a trend here? Yes…. Trends everywhere point to a sideways or consolidating pattern in anticipation of “something.” 

The obvious question is whether or not that “something” is this weekend’s EU summit, but with yet another summit as early as 10/26 and more summit-related headlines than we’d care to read or even consider, one has to wonder…   One thing’s for sure: it’s nothing to do with tomorrow’s domestic economic data because apart from the ECRI (a traditionally inconsequential broad economic index), there is none.  But there will be some Fed-Speak.  Apart from that, markets remain at the whim (unfortunately) of every little headline out of Europe. Those, of course, don’t adhere to a schedule. So between that fact, and the lack of economic data, it could be an interesting day…


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