Big Losses For Bonds After 3 Weeks of Gains

The last 3 weeks of May were like an oasis in what has otherwise been a wasteland of bond market weakness in 2022.  Sure, there was a temporary flight to safety when Russia invaded Ukraine, but that was never bound to be a sustainable source of bond buying demand.  If anything, it increased inflation concerns (and consequently kept upward pressure on yields).  Speaking of unsustainable things, suspected May's rally was set to give way to a volatile sideways range. With multiple 10yr yield bounces at 2.72% and today's big sell-off, we may have just witnessed confirmation of that range.

Econ Data / Events

  • Fed MBS Buying 10am, 11:30am, 1pm

  • Case Shiller Home Prices...... 21.2 vs 20.0 f'cast, 20.3 prev
    Chicago PMI....................... 60.3 vs 55.0 f'cast
    Consumer Confidence......... 106.4 vs 103.9 f'cast

Market Movement Recap
08:21 AM

Sharply weaker overnight on a slew of overseas developments (details...).  10yr up 9.4bps at 2.837 and MBS down 14 ticks (.44) at 99-31 (99.97).

11:34 AM

Pushing highest yields of the day with 10s up 12.3 bps at 2.866.  MBS down half a point at 99-30 (99.94).

03:43 PM

Flat all day in Treasuries, despite a bumpy ride.  MBS recovered some of the early losses, but not much.  4.0 coupons now down "only" 14 ticks (.44) after being down closer to 5/8ths at the lowest levels.