Range Trade at Risk. First Sign of the Apocalypse?

The outer limits of the recent range are being tested.

The range has been the range for more than a month now. This range has been 3.30 to 3.50% in benchmark 10 year notes with outlier attempts at 3.25 and 3.57%. More recently we've seen that range consolidating at a faster rate.

Yes, we keep talking about 10yr yields before MBS right now because we need a non-spread-product benchmark by which to measure changes in the broader directional bias of the bond market.

As far as the diagonally sloped range boundary that had been part of a consolidating trend in 10yr yields, that has been BROKEN today. So we move back to the more traditional horizontal boundary which is currently being tested and holding (maybe?). 

The chart below shows the 3 potential ways to look at the range at the moment:

Could we be looking at the first sign of the apocalypse? 

Maybe....  The obvious conclusion is that we MUST hold 3.50% in 10s or all hope is lost, right?  But less obvious thought is that "out of bounds lead-offs" are sometimes seen ahead of stuff like NFP, and the nail isn't necessarily in the coffin until NFP confirms.  So I guess the best way to think of today's breakout is as "first sign," but not necessarily "Apocalypse Now!"

That being said, rate sheets have been taking an apocalyptic beating as FNCL 4.5's continue to ratchet down.  MBSonMND members have been up to speed on potential reprices for the worse since well before they were seen.  (Learn More)