Deceptively Uneventful Trading Day For Bonds

Right out of the gate this morning, bonds responded to the massive beat in the Housing Starts data.  We almost never see housing-related economic reports driving the bond market these day, so this was perhaps the most interesting part of the day.  At least it would have been if yields didn't reverse course in short order.  There was little to credit other than the 9:30am NYSE open or political headlines.  Either way, MBS hovered within an eighth of a point of unchanged, but rates were nicely lower versus Friday (lenders priced conservatively ahead of the 3-day weekend).  The next 2 days bring congressional testimony from Fed Chair Powell.

Econ Data / Events
    • Housing Starts
      • 1.631m vs 1.4m f'cast, 1.401m prev
    • Building Permits
      • 1.491m vs 1.42m f'cast, 1.417m prev
Market Movement Recap
09:31 AM

After opening weaker overseas, bonds rallied all night, lost some ground after 8:30am data, but bounced back to stronger levels at 9:30am.  10yr down 4.2bps at 3.725.  MBS up 1-2 ticks (0.03-0.06), but would be doing better if not for illiquidity.

12:42 PM

Holding AM gains fairly uneventfully.  10yr down 5.8bps at 3.709.  MBS up just under an eighth.

03:08 PM

MBS at lowest levels since the first hour of the day, down 2 ticks (.06) overall and at least 5 ticks (.16) versus the AM highs.  10yr down 4bps at 3.727.