MBS RECAP: 2 Months of NFP Losses Nearly Erased

While mileage may vary depending on the lender, many are getting close to levels not seen since Thursday Feb 5th, a day before the NFP report that kicked February's selling trend into high gear.  That would go on to receive an exclamation point with March's NFP release as rates hit 2015 highs in its wake.  But ever since then, rates have been descending, and not in a half-hearted way.  11 out of the last 12 days have been steady or stronger.

Today was particularly interesting as both of this morning's economic reports were stronger than expected.  Even though they didn't beat big, if bonds would have been looking for an excuse to bounce off recent floors, they would certainly have had it this morning.  The fact that European bonds continued to weaken only adds to that "excuse" potential. 

Instead, bonds broke forcefully through those floors.  This is a strong technical statement, and exactly the sort of thing we needed, based on the discussion in this morning's "day ahead: Decision Time For Bond Markets After Running Out of Momentum."

The last "yeah but" I can offer would be to say that breaking through resistance floors for one day can sometimes serve as a signal for sellers to step in.  With that in mind, holding onto the technical break through tomorrow would be ideal confirmation.