MBS Day Ahead: Critical Battle For Support As Rates Risk Pivoting Higher

Bonds are either on the doorstep of critical line in the sand, or they soon will be.  These lines are drawn on the technical ceilings at 1.37% and 1.43% in 10yr yields.  With highs of 1.375% already hit this morning, the first battle is well underway.  At this point, Powell’s Jackson Hole speech wouldn’t need to be too terribly hawkish tomorrow in order to tip over some technical dominoes that lead to the next battle at 1.43%.  If that battle is lost and covid numbers stabilize, we could be witnessing the confirmation of a longer-term uptrend in rates (the one we were …