Another Head Fake Comes and Goes With Help From Data and Powell

As of yesterday, bond yields looked like that at least had a chance to remain under the 2.92% pivot point after breaking below it for the first time in 2 weeks last Thursday.  With a bit of weakness this morning, yields began the day right at 2.92.  After the stronger Retail Sales data, it was game over.  Selling pressure continued throughout the day and it found no solace in afternoon comments from Fed Chair Powell.  With MBS losing roughly 5/8ths of a point and 10yr yields up almost 10bps to 2.98%, it's safe to say another head fake (toward lower rates) is in the books.

Econ Data / Events

  • Fed MBS Buying 10am, 11:30am, 1pm

  • April Retail Sales 0.9 vs 0.9 f'cast
    -March revised up to 1.1 from 0.7

  • Industrial Production 1.1 vs 0.5 f'cast, 0.9 prev

  • NAHB Builder Confidence 69 vs 75 f'cast, 77 prev

Market Movement Recap
09:11 AM

Weaker right from the start of the overnight session as China rebounded.  Flat in Europe.  More weakness after Retail Sales.  10yr up 7.5bps at 2.96 and 4.0 UMBS down 3/8ths of a point.

11:34 AM

Weakness continued into 10am, then bounced as stocks began to sell-off.  That bounce bounced at 11:45 and we're back near weaker levels with 10s back up to 2.96 (from 2.93) and MBS back to -3/8ths on the day.

02:26 PM

Volatility after Powell comments, but no major change in levels or the intraday trend.  MBS had already weakened another eighth of a point and are currently down half a point on the day.

03:52 PM

New lows for the day with MBS down 5/8ths.  Selling continues to be linear, but with bigger jumps between highs and lows over the past few hours.  10yr yields continue selling calmly, now up 9bps at 2.978%.