MBS Live Recap: Range Holds as Risk Appetite Returns

Several events helped get investors back in a riskier mood to begin the new week.  Overnight reports of the "status quo" candidate polling better in the French election helped the momentum get underway.  During domestic hours, economic data was weaker overall, but generally ignored in favor of political headlines.

Specifically, President Trump said he had big news on infrastructure spending  to share at tomorrow's much-anticipated "address before the joint session of Congress" (in other words, don't call it a "state of the union" address).  Dallas Fed President Kaplan added to the momentum when he offered his thoughts on the Fed's next rate hike.  While he didn't come right out and say "March," he may as well have.

Bonds were under steady selling pressure throughout the morning, but trading levels moved the most after European markets closed.   Between European bond buyers being gone for the day and hedging needs from a healthy slate of corporate bond issuance, sellers dominated the afternoon hours. 10yr yields ended the day up 5bps at 2.366 and Fannie 3.5 MBS lost 10/32nds to end at 102-16.