Important Day For Bonds and an Important Conversation About MBS Coupons

The important conversation about MBS coupons was partially covered in the AM commentary.  Check it out if you haven't. A more detailed discussion is available in today's recap video.  As to why it's an important day for bonds, that's more of a qualitative assessment reflecting on the brutality for brutality's sake--2 days of selling so overdone RELATIVE to trading motivations that we should increasingly be prepared for something new to happen, whether due to some market dislocation or the simple notion of yields finally being high enough to truly motivate buyers. 

Econ Data / Events
    • Philly Fed Index
      • -8.7 vs -5.0 f'cast, -9.9 prev
      • Prices: 36.3 vs 29.8 prev
      • Employment: 28.5 vs 12.0 f'cast
    • Jobless Claims
      • 214k vs 230k f'cast, 226k prev
    • Existing Home Sales
      • 4.71m vs 4.70m f'cast, 4.78m prev
    • Leading Indicators
      • -0.4 vs -0.3 f'cast, 0.0 prev
Market Movement Recap
08:43 AM

Initially slightly stronger, but losing ground after AM econ data (weaker headline, but higher employment and inflation numbers).  10yr up 2bps at 4.16 and MBS down a quarter point.

12:01 PM

Some ups and downs since the open, but not far from levels seen within 10 minutes of the 8:30am econ data.  MBS are closer to the lows, down 6 ticks (.19) on the day.  10yr yields are up 3.2bps, near their highs at 4.169%

02:41 PM

Additional weakness in the PM hours.  MBS down half a point on the day and more than 5/8ths from the highs.  10yr yield up almost 8bps at 4.216.