From MBSonMND: “Things have no doubt been volatile this week. We continue to hear and see that this has more to do with month and quarter-end position squaring. With two more trading days left in September, that means we may well continue to see volatility seemingly unrelated to the economic events in the marketplace.
With tomorrow’s auction being the last of the cycle, there may be some latent relief bid waiting in the wings. Either way, the bottom line is to not let the volatility bother you too much as long as the 10yr benchmark is staying inside a range, probably marked by 2.06 on the upside, or by a Fannie 3.5 MBS price of 101-25 to use a metric specifically focused to MBS markets.”
I thought today’s parting shots would be infinitely more meaningful with a few charts showing the supportive moves that occurred today in Treasuries and MBS. I’m particularly struck by the fact that 10yr notes have not once closed outside their trend channel for two consecutive days (and only really noticeably moved out of the range in the knee-jerk response to the latest FOMC statement).
The MBS chart is interesting as well. Today’s big bounce coincided with–you guessed it–the concrete ceiling at 101-25! Potential pivot point of epic proportions? Just some food for thoughts, hopes, and dreams as October approaches: