MBS Live Recap: Deceptively Bad Day For Bonds

At face value, today was great!  Bonds overlooked all of the morning's economic data (no surprise) and made modest gains that were subsequently held throughout the session.  There was very little volatility.  The ground-holding came despite gains in stocks.  And multiple lenders repriced positively.

Indeed, all of the above is "good!"  The issue is that all of that ground-holding occurred in the thick of yesterday afternoon's range and yesterday afternoon was the worst afternoon for bond market in more than 4 years!  Even more disconcerting is the fact that yields ran into resistance today at a floor around 2.88% which was an important ceiling over the past two weeks.  It was only meaningfully broken yesterday, so to return to the scene of that crime and use 2.88% as a floor is not good from a technical standpoint.

All this to say that the same old trend continues to be the same old trend.  Sure, we didn't get a huge wave of new selling pressure today.  Sure, we actually spent most of the day in positive territory.  But these modestly positive days are simply going to happen even if the broader, negative trend continues taking rates higher overall.