MBS Live Day Ahead: A Time For Celebration And Caution

A more and more vocal contingent of traders and analysts began calling for "1.25% before 1.75%" over the past 2 months and they were rewarded overnight as 10yr yields hit their target on the nose.  The best answer to the question of "why?" is that it's not yet time for yields to move higher if they are indeed destined to do so.  And 1.25% is a nice round number on the edge of the last major opening gap seen in early February.  The more important question is "what now?"  There are still bullish ways to answer that, but even the previously bullish traders will increasingly be thinking about at least a tactical pull-back at the intersection of 5-month lows and 8 straight days of gains.