Without Conclusive Answers, The Sideways Curse Continues

While it may be blessing for rates to be flatter and more predictable lately, the fact that the sideways range is close to long-term highs feels more like a curse.  More banks may be at risk of failing and some economic data may suggest recessionary cracks, but inflation and labor market data have yet to shift in a way that conclusively implies the next big trend should be toward lower rates.  Until that stalemate is resolved, bonds will be hard pressed to be anywhere else but in the same old sideways grind.

Apart from the year-end drift in December and the false start created by strong econ data in February, bonds have spent almost all of their time in the same range for 6 months now. 

Since late March, there have been 3-4 halfhearted attempts to break the range.  The two most recent examples have been progressively less forceful.  This only reiterates the gravity of the range and the clear undertones of consolidation.  The telltale "higher lows and lower highs" are very easy to see in the mortgage rate world.

For rates to be holding a sideways trend that's roughly .75% below 2022's highs is quite impressive.  Treasuries can scarcely make the same claim and MBS arguably have more headwinds.  Among those, the most obvious is the extra glut of unexpected supply via the FDIC's liquidation of failed bank assets.

This week's biggest data headline is probably Tuesday's Retail Sales, expected at 0.7 vs -0.6 previously.  There's probably not a result that's worth challenging the range, but it can inform volatility inside the existing boundaries.