Is Wednesday's Rally Enough to Turn The Tide?

10yr yields began the day with overnight levels easily over 4.00%.  It wasn't until the 6am emergency bond buying announcement from the Bank of England (BOE) that yields began to plummet.  While US 10s didn't quite enjoy the 50bp rally seen in British bonds in the first 40 minutes, we did manage to work our way down to a 20bp rally by the afternoon.  MBS gained the better part of a full point.  We wish we could tell you that this, alone, signifies a profound change in the bigger picture, but alas.  The BOE stopped the bleeding.  While this COULD end up lining up with a bigger picture shift, that shift would ultimately need to be confirmed by other events.  Today's video discusses these considerations in greater detail.

Econ Data / Events
    • Pending Home Sales
      • -2.0 vs -1.4 f'cast, -0.6 prev
Market Movement Recap
09:12 AM

Weaker at first overnight, but emergency Bank of England announcement bails bonds out at 6am.  10yr down 9bps at 3.858.  MBS up half a point.

11:42 AM

After a brief dip in the 10am hour, bonds are back near their best levels of the day as Treasuries chase the British bond rally.  10s are down almost 17bps at 3.783.  MBS are up 5/8ths of a point. 

01:04 PM

7yr auction at 3.898 vs 3.905 f'cast. Good bid-to-cover. Good result--especially on a rally day. adding to gains.  10yr down 20bps at 3.753.  MBS still up 5/8ths. 

04:34 PM

Modest additional gains into the 3pm close.  MBS up almost .875 and 10yr down 22bps at 3.731%