MBS Live Morning: Bond Traders' Game Plan: Sell First, Ask "Why" Later

Momentum, macroeconomic considerations, and Fed policy continue to dominate the bond market since last Thursday as traders are swept up in the widespread repricing of risk.  While the Fed announcement was at ground zero, it's not the only game in town.  Covid numbers are increasingly coming up in trader/analyst commentary.  Beyond that, technicals and momentum are exacerbating what otherwise might have been a more orderly sell-off.  Volume is very high (as is always the case when we throw around terms like "widespread repricing of risk") and we have yet to see compelling signs that buyers are stepping in to stop the bleeding.

There's a possibility that buyers show up after today's key events, the 7yr Treasury auction and Fed Chair Powell's congressional testimony.  That is not the sort of thing to plan on as much as it is simply a possibility to be aware of.  We'll discuss the implications if we see positive momentum ramping up after 1pm.  

There's some room for Treasuries to run before hitting the next serious resistance level at 1.59%.

As for the yellow lines, they mark the big picture covid consolidation (reinforced by the last 5 days of weakness)