Uneventful Trading Day Finds MBS Near All-Time Highs

Today has been overwhelmingly slow and uneventful for MBS and Treasury markets alike.  Volume is lower than every day last week with the exception, perhaps, that we could reach Monday's totals in terms of 10yr futures by the end of the day.  Considering that we're, in a sense, making up for a lost day yesterday, that's quite low. 

The only moderately interesting thing to have happened in Treasuries all day has been the early bounce of 1.90+, which was in line with Friday morning's high yields.  Since then, 10's quickly returned to trade firmly inside Friday's range, though have been favoring the more bullish end between 1.87-ish and 1.85.  Narrow, boring range... 

MBS similarly bounced at their same levels as Friday morning and similarly returned to trade firmly inside Friday's range.  Here's a video clip of the above-referenced range-trades from the MBS Live Dashboard:

Current levels are only a few ticks off all time highs and given the extreme NARROWNESS of the trading range combined with the fact that we'd discount the euphoric rally that followed the September 21st MBS announcement, it's just as well to say MBS are sideways at all time highs.  For what it's worth, we'd continue to keep an eye on the eerily steady uptrend that supportively underlies almost all price action since October with the inclination to get more defensive when it breaks by more than a few ticks for more than a day or two.

Some supplemental charts just for a snapshot of a few things we're noticing as we look for something interesting to say about today's relatively uninteresting markets:

1) simply an update that the trend-channel in 10yr yields mentioned last week remains intact (incidentally, I'd say I'm not as interested in the upper line as I am the lower.  The lower line has been better-behaved from technical standpoint, while the upper--although certainly seeing plenty of activity--did "that thing" that trendlines sometimes do in that it served as a midpoint for a triangular trend consolidation in late November/Early December).  The lower line's "bounce-to-break" ratio is much better by comparison, especially if you want to factor out that late November spike as holiday-related.

The other potentially interesting thing we're seeing, is the ongoing divergence of stocks and Treasuries.  There are a lot of theories on this, but suffice it to say that "safe haven demand for US Debt fueled by ongoing concerns over the European Debt Crisis at a time when domestic economic data appears to be stabilizing and possibly ever-so-slightly improving," at the very least, accounts for a significant portion of the discrepancy regardless of the theory (or it should anyway!).