Nice Tuesday For Bonds, But It's All About Wednesday

Tuesday turned out to be great for bonds with MBS up nearly a quarter of a point for most of the day and 10yr yields ultimately dropping into the 4.35's by the final hour of trading.  As nice as it is to see a rally these days, it's best thought of as an isolated, random victory without any bearing on the bigger picture.  Granted, we may be seeing some evidence of "value buying" with yields getting near 4.5% on Monday, but Wednesday's CPI would still need to cooperate in order to confirm that hypothesis.  To be clear, there is no way to know whether CPI will do that.  It's just another coin flip in the game of helping or hurting rates, but on a much bigger scale than the average economic report.

Econ Data / Events
    • Nonfarm Payrolls
      • 303k vs 200k f'cast, 270k prev
    • Unemployment Rate
      • 3.8 vs 3.9 f'cast, 3.9 prev
    • Earnings
      • 0.3 vs 0.3 f'cast, 0.2 prev (revised up 0.1)
Market Movement Recap
08:05 AM

Steadily stronger overnight.  10yr down 4.6 bps at 4.381 and MBS up 6 ticks (.19)

10:00 AM

Fairly flat in the first two hours.  MBS up 7 ticks (.23) and 10yr down 5bps at 4.377

01:07 PM

Modest selling in Treasuries after the auction, but nothing serious.  10yr down 4.8bps at 4.553.  MBS up 6 ticks (.19).

04:07 PM

Sideways all afternoon, but modest gains in the past few minutes.  MBS up a quarter point.  10yr down 7.2bps at 4.356