MBS RECAP: More Lead Changes Today, but Still Waiting on Tomorrow

Despite bond markets undergoing many more vacillations between "positive" and "negative" territory today, trading levels are still heading out the door essentially unchanged.  That's sort of a victory on a week where the first two days saw rates moving slowly but surely higher.  Either that, or it's simply a leveling-off process ahead of tomorrow's more robust data calendar.

If there's something to be disheartened about, it's the amount of time that 10yr yields have willingly spent moving back into the 2.6's.  But optimists could just as easily note that 2.647 held up as a great 2-day ceiling during domestic market hours and the important 2.66 level held up to an overnight test.

When yields break back into a previously sideways range after a rally, and when they start finding overhead support before traversing that range, it can sometimes be a signal that the previously aggressive downtrend is morphing into a gentler downtrend longer-term.  It's way too soon to know whether or not that's happening hear, but any little victory would help keep the possibility alive.