This morning's ECB announcement proved to be moderately bond-friendly. Combined with weaker Jobless Claims data, it's been enough to keep bonds inside this week's new, lower yield range marked by a ceiling of roughly 1.30% (we have it marked at 1.295, or 1.29+ for short).  We're close enough that it wouldn't take much of a negative impulse for that ceiling to be challenged, but more dramatic movement may be reserved for the next two weeks which will bring a Fed announcement and the hefty data cycle culminating in NFP Friday on August 6th.

Perhaps the bigger question is whether or not yields just experienced a big-picture bounce by filling February's opening gap (a rare technical phenomenon where bonds start a new trading day noticeably farther away from the end of the previous day).  The following chart shows that gap as well as the 1.29+ technical level.  It also presents another way to view a resistance bounce as a visit beyond the lower boundary of a trend channel (yellow lines).  Finally, there's a 200-day moving average just for kicks.

I almost never include moving averages in my charts for a few reasons.  I made an exception for this one as it has come up in chat a few times recently.  It's important to note that in past instances where yields have approached the 200 dma, there hasn't been any consistently predictable behavior (at least not over the time horizons that would benefit someone in the mortgage world).  Decide for yourself though:

I feel like context is important, and in that case, 2009 is the only remotely similar precedent.  Like 2021, it saw a big jump in yields after a once-in-a-lifetime shock to the economy (which was, itself, preceded by a gathering storm of economic malaise which fell well short of anything recessionary, much like the 2019 trade war and "global growth concerns").  Unfortunately, that precedent makes a case for yields to bounce back up toward 1.75% in slow motion over the next 6-8 months.  If you prefer, lean on the 2014 precedent which saw yields break right through and keep on dropping (and just never mind the fact that they had overt motivation from the inception of the ECB's bond buying program).