Good Morning on this best day of the week, Wednesday.
Some great insight from Dan Rawitch today (he speaks better than he writes at the moment, but you will get the gist).
I kind of promised you a rally, I didn’t really say it’s coming tomorrow, but I told you up at these levels, it was really critical. This level on the 10-yr note goes all the way back to 08 and each time we’ve touched it since 08 we have bounced off it severely in a good way. I’m talking we’ve seen yields cut in half in a matter of a month or two from this level. I am not saying that’s what’s gonna happen, I am saying this is the first real bounce we’ve seen and it’s a big one. I mean yesterday we touched 4.36. today 4.19% 17 basis points is a very material move and it invites me to bring on Fibonacci.
Where we could be heading next is 4.08.
That’s another 15 basis points down and that would be the first level of Fibonacci. That’s what I’m looking for. Mortgage bonds, same story. We’re touching just about an a really key Fibonacci level so if we can close above, it then we’ll head up another 90bos in price (lower rate) which is a level we’ve talked about several times and again I just feel really compelled to point out Fibonacci and just how unbelievably accurate this tool is. I firmly believe this is a technical rally that was due and it and it’s spurred from touching that very high resistance level that we’re talking about. New home sales beat expectations. That’s not bond friendly, that didn’t help. And the PMI this is the SMP global. This is a relatively new indicator. And yeah, the numbers came in pretty bad, but we’ve seen PMI numbers way worse on the PMI numbers that matter. These show up other places.
This looks like a pretty bullish technical move. Let’s hope it continues. Tomorrow, not much other than unemployment claims and durable goods data, but then the next day we have the fed speaking in Jackson hole that could prove interesting. So be careful.
Please remain safe and stay healthy, make today great!