Concrete Ceiling Remains Intact! But There's A Twist!

In yesterday's commentary, we noted that the stock lever has been well-connected and that the same could be true of today.  As you'll see in the chart below, it is.  You'll also see the biggest volume spike of the day at 3pm (those are 10yr futures contracts for the record).  That's not because some major economic event or headline came across the wires, but rather because 3pm is day/week/month and quarter-end for bond markets.  Who knows what positioning intentions lurk in the hearts of traders leading up to such a moment!  (Actually, looks pretty simply like a bunch of quick, last-minute profit-taking.  Money flow decreased, indicating the closing out of positions, yields rose, but a willing buyer or two was waiting in the wings to bring things back to reality)

Speaking of reality, the 3pm quarter-end marks for 10yr yields confirm that the downtrend channel we've been following is very real indeed.  Yields sought out the mid-point of this trend channel:

The fact that benchmarks bounced so nicely near the top of that trend channel and rallied to confirm the bounce has been great for MBS staging their own version of the bounce.  As it turns out the "concrete ceiling" we thought was broken is actually very much intact, but somehow--teleportation maybe--we're on the other side and just took a big old bounce on it.  Once again, here's an ongoing look at the confirmation process of MBS's bounce off what may turn out to be the new "Concrete Floor."