Monday 8/18 ... Multiple Interpretations

We've examined a few trend channels recently.  Until 3pm today, we had a nice trend channel going.  But at that time, the lower trend line was violated.

 Normally, this is bearish news for the rest of the day.  But whether it is or it isn't, your decision making process this afternoon should not necessarily be affected.  Reason?  The "close" of the MBS market technically takes place at 3pm.  So trading volume and liquidity are general lower at that time and the post 3pm period is often subject to more volatility.

Plus, consider that the curve, even though widening vs. treasuries has held relatively flat despite negative GSE headlines.

Nonetheless, we have dropped to 100-05 currently making it a possibility for more skittish lenders to ding you for an eighth.  Unfortunately, the final version of today's story won't be clear until tomorrow's data.  Even then, the rest of this week is compartively "data light."

Indeed, we have better rates today than we've had in a few weeks, so it is tempting to lock.  If you do so, be advised that many analysts are bullish on fixed income technical and fundamental analysis.

In contrasting reports, Chase today says MBS spreads are "fantastic" and headline risk is favorable.  Deutsche Bank, on the other hand, sees continuing widening as GSE opinion languishes.

Choose a side!