MBS Live Recap: Bonds Undo Yesterday's Damage But Bigger Days Are Coming

If nothing else, today made it clear that markets care about the next Fed chair... a lot!  Despite the presence of GDP data, Consumer Sentiment, and other various market moving considerations, it was a few lines of speculative news about Jerome Powell's potential Fed Chair nomination that set the tone. 

It wasn't a close call either.

The Powell headlines were an otherworldly source of volume and momentum relative to anything else on today's radar.

Fortunately, bonds like Powell better than the other ostensible frontrunner Taylor.  Stocks like Powell too, for that matter, as Powell is generally seen as more accommodative--more Yellen-like.  

10yr yields rode the wave of momentum all the way down to the 2.42% technical barrier, but again, were unable to break through.  While it's true yields eventually drifted to 2.4155% to end the day, analysts don't put much stock in low-volume, late day moves that occur after the 3pm CME close (considered to be the close of official business for US bond markets) and neither should you.

Either way, all eyes are on next week, as Trump is said to deliver the Fed Chair news before he leaves for Asia at the end of that week.  As long as that happens, we're likely to get the verdict on the recent sell-off.  A Powell nomination looks like it may be enough to reverse the curse, while Taylor seems like an obvious continuation of recent weakness.