Unhappy New Year For Bonds So Far

The first trading day of the new year ended up being one of the worst in months for the bond market.  To make matters worse, there were no satisfying explanations as to why it happened--no obvious, individual market movers to blame.  In fact, the day's biggest selling happened simply because the clock struck 8:20am (the CME open).  From there, technicals, illiquidity, and corporate bond issuance all played supporting roles in the combined justification for a snowball selling spree that took 10yr yields nearly 12bps higher (and MBS lower by more than half a point) by the 3pm close.

Econ Data / Events

  • Fed MBS Buying 10am, 11:30am, 1pm

  • Construction Spending 0.4 vs 0.6 f'cast, 0.4 prev

Market Movement Recap
08:43 AM

Off to a rocky start with a big surge of selling at the 8:20am CME open.  10yr yields up more than 6bps at 1.574 and MBS down a quarter point.

11:13 AM

linear weakness continues with MBS now down 3/8ths on the day and 10yr yields up over 9bps at 1.605.

01:02 PM

More time, more weakness.  10yr up more than 11bps at 1.623 and MBS down half a point on the day.

03:57 PM

Weakest levels of the day after the 3pm CME close with 10yr yields up 12bps at 1.633 and UMBS 2.5 coupons down more than half a point.