Taper This! MBS Bond ETF Breaking Out

With all the fear and loathing surrounding the Fed’s tapering of its latest bond-buying QE binge, someone forgot to tell the MBS market – at least, the iShares MBS Bond ETF (MBB), which broke out to a 2-year high yesterday. And that does not even include dividends.

Unlike the taper tantrum of June-July 2013 which sent the ETF down some 5%, MBB has been very well behaved in the face of actual tapering. After consolidating its September-May rally for the past 5 months, the ETF broke out to new highs yesterday and looks ready for the next leg upward. This is why we always rely on price instead of “conventional wisdom” or conjecture.

It’s always possible, especially considering the recent plethora of false breakouts that this could too fail. However, for now, MBB seems to be saying Taper-Shmaper.

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