Friday, June 28, 2013

Muni and Mortgage Market Sell-off in Perspective

The municipal bond market (MUB, top chart) and the mortgage bond market (MBB lower chart) have both broken support as a result of the recent Fed moves.  But both of these moves were have been telegraphed for the last 9-12 months by the declining MACD.  Also note the both have bounced backed fairly strongly this week as traders have clearly found some degree of value in the levels from last week.

The point to this chart is that when we pull back the lens to the weekly charts, we notice that the panic caused by the Fed's announcement was a bit overdone.