- MBS bouncing between 101-00 and 101-04
- analogous range for 10 yr tsy 3.34 to 3.32
- consumer confidence, NFP, prepays, month-end, bernanke, all on calendar this week,
- but none of it today!
- No facemelter, but another extension of rally on Friday as Durables and home sales gave us a friendly stock lever
- Fed's Warsh's comments regarding "earlier than necessary" irate-hike was also seen by some to hurt shorter duration bonds
The term "slow" can be sometimes be misleading in this context. Although the absence of scheduled data combined with Yom Kippur's attendance toll are seen hurting volume, low volume doesn't always connote price stability. In fact, it's in the midst of low volume that any given trade accounts for a bigger piece of the daily pie meaning that price direction can be influenced by fewer participants. The saving grace here is that high volume trading tends to be much more indicative of the actual trends. That doesn't mean that movements on days like today don't matter, but rather that we'll likely be waiting for volume to pick up this week before making a more austere assessment of where we are and where we're going. Hopefully that helps put any frustrating fluctuations in perspective today as we're leading off about 4 ticks lower so far this AM.
Current price levels with MBS at 101 and 10yr tsy at 3.34 obviously suggest themselves as some intraday resistance even if only considered in the context of the 2 day period. Why? Nothing more complicated than both of those levels serving as previous support/resistance. From there, the fact that 101-00 has proven to be significant in the long run might add to expectations for a bounce this AM. In the absence of data, stocks and headlines naturally play a more important role, so to the extent headlines remain dormant, we'd expect the stock lever to be in effect. Whatever the case, we'll keep you posted on any significant movements and let you know if there is enough volume to speak to a longer term outlook.
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