Today is Best Viewed as "In-Range Volatility"

Bonds began the day on the back foot as UK inflation crushed forecasts.  Treasuries sold in sympathy, but found their footing before the start of the US session.  From slightly lower opening yields, the rest of the day was spent selling, apart from a brief bounce surrounding the 5yr auction and Fed Minutes release.  Yields were less than 3bps higher at the 3pm close and haven't gone much higher after hours.  No one likes higher rates, but today is best viewed through the lens of in-range volatility.  MBS can't quite make that claim as 5.0 coupons are a bit lower than they were yesterday, but 10yr yields traded under yesterday's ceilings.  Nothing was decided in the bigger picture.  The Fed is data dependent.  Inflation is still too high. Corporate earnings suggest a resilient economy.  And we're waiting until early June for more relevant econ data.  

Econ Data / Events
    • S&P Manufacturing PMI
      • 48.5 vs 49.0 f'cast, 50.2 prev
    • Services PMI
      • 55.1 vs 51.5 f'cast, 53.6 prev
Market Movement Recap
09:44 AM

MBS down an eighth of a point, underperforming.  10yr also losing ground, near AM highs, but still down 0.6bps at 3.692.

11:57 AM

Steady weakness throughout AM hours and another pop of selling following debt ceiling progress headlines.  10yr up 2.8bps at 3.726.  MBS down 9 ticks (.28).

02:04 PM

No major reaction to FOMC Minutes.  10yr up 2.3bps at 3.721.  MBS down a quarter point.

03:24 PM

Modest gains until about 2:40pm, but losing ground since then.  10yr up 3bps at 3.728.  MBS down 3/8ths with almost an eighth of that due to illiquidity.