Bonds Like Fed's Dovish Hike

There was really only one option for the Fed today: hike rates by 25bps but signal a willingness to let that be the ceiling.  That's essentially what the Fed delivered, both in the announcement itself and again (multiple times) in the press conference.  In addition, Powell didn't express much concern about the banking sector other than to say that it implies credit tightening.  He also reminded us that Fed economists are still forecasting a mild recession later this year.  All of the above was about as good as the bond market could have hoped for today.

Econ Data / Events
    • ADP Payrolls
      • 296k vs 148k f'cast, 142k prev
    • ISM Non Manufacturing
      • 51.9 vs 51.8 f'cast, 51.2 prev
      • Prices 59.6 vs 59.5 prev
Market Movement Recap
08:49 AM

Bonds rallied moderately at the start of EU trading, pulling the 10yr down from 3.44 to 3.39 overnight.  Currently 3.40.  MBS are up a quarter point.

01:18 PM

Sideways to slightly stronger ahead of Fed announcement.  10yr down 4.9bps at 3.384.  MBS up 9 ticks (.28).

02:14 PM

No huge reaction to the Fed.  Trading levels right in line with the last update.  Waiting on Powell at 2:30.

03:31 PM

Bonds relieved after press conference ends.  10yr down 5.4bps at 3.379.  MBS up almost 3/8ths.