Bonds Follow First Republic News Cycle; MBS Underperform

First Republic Bank (FRC) remains in focus as a tradeable name for financial markets.  Yesterday's earnings proved helpful but today's headlines mostly pushed back in the other direction.  Overnight news of bond liquidation efforts put pressure on the broader bond market for supply-related reasons (selling more bonds requires lower prices and higher yields, all other things being equal).  FRC stock swooned early, then recovered.  Bonds followed both moves and ultimately found their footing after headlines regarding restrictions on the bank's borrowing from the Fed as well as an FDIC downgrade if a deal isn't reached.  

Econ Data / Events
    • Durable Goods 
      • 3.2 vs 0.7 f'cast, -1.2 prev
    • Core Durable Goods
      • -0.4 vs -0.1 f'cast, -0.7 prev
      • last month revised down from -0.1
Market Movement Recap
08:52 AM

Flat until 7:40am.  FRC headlines caused weakness.  Slow bounce back since then.  Data ignored.  10yr up 1.5bps and MBS down 3 ticks (.09).

11:18 AM

Steady gains into the 10am hour but losing ground since then.  MBS down a quarter point on the day.  10yr up 1.7bps at 3.417.  They were as low as 3.375.

01:12 PM

Strong auction, but no major reaction.  Perhaps it helps stem the tide of selling that's been in place since 10:30am.  10yr yields up 5.2bps at 3.452.  MBS down 3/8ths of a point. 

03:30 PM

Decent recovery after FRC headlines regarding lending curbs and FDIC downgrade threats.  10yr still up 3.2bps at 3.432.  MBS still down 10 ticks (0.31).