MBS Live Recap: Bonds Battle Back After a Ceiling Bounce

Today ended up being somewhat triumphant for bonds.  It didn't begin that way, however.  Yields were higher overnight and moved up just a bit more in the first hour and a half of domestic trading.  Early economic data was largely ignored.

At 9:30am, bonds started improving.  Based on the timing, we can assume ETF trading played a key role as investors put on new trading positions for the new month.  Stocks were also losing ground heading into 10am and that seemed to have a complimentary effect on bonds.  Notably, bonds continued to fare well even as stocks bounced and moved higher by the end of the day.  

This leaves us with some evidence for a ceiling at 10yr yield levels near 3.16-3.17% and a floor at 3.06% based on the big bounce seen at the beginning of the week.  Given that we're currently closer to the ceiling, caution is warranted from a lock/float standpoint.  

Tomorrow brings the important NFP data--the big jobs report that includes the nonfarm payroll count, unemployment rate, and wage growth data.