MBS RECAP: New Highs For Treasury Yields; MBS Outperform

Bond markets began the day under pressure from decent economic data in Europe and the continuation of generally negative momentum coming off last week's FOMC Announcement.  Treasuries had it worse than MBS as the former were more directly affected by a busy day corporate debt issuance.  As a reminder, this hurts bonds in general by creating more supply in the market, and Treasuries specifically due to the hedging strategies commonly involved (i.e. corporate debt issuers often sell Treasuries to effectively "lock their rate").

The day's only data was ISM Manufacturing, which came in at 50.1 versus a median forecast of 50.2.  This isn't a big enough beat to cause any meaningful additional weakness for bonds, and the market movement continued to suggest the corporate debt story was the bigger consideration.

On a positive note, while we did lose ground today, bonds did show a good amount of resilience in the way they held on to a ceiling in yields.  10's bumped up against 2.18 frequently and seemed to be uninterested in venturing much higher.  On the other hand, 10's also hit 2.167 twice during the day and clearly weren't interested in going any lower either.