MBS Live Day Ahead: Fed Meeting Minutes Likely a Non-Event

Bonds are on a roll at the moment with 5 of the last 6 trading days resulting in lower yields.  Rather than stand as some evidence of new strength in the bond market, this has more to do with technical correction as more than 60% of the trading days since early October have resulted in higher yields.  More to the point, before the 6-day rally mentioned above, the previous 6 days saw yields rise nearly 30bps.  We've only retraced about 20bps of that move so far, with today's overnight session helping the cause noticeably.

If we zoom the chart out a bit more, we can see the bigger-picture consolidation (and the fact that yields are pushing the bottom boundary as of today).

These sorts of technical movements/bounces can serve as cues for risk averse borrowers/originators to favor locking  over floating.  In general, it's not unwise to plan on day-to-day volatility that's contained in this sort of broader sideways-to-slightly-narrower range, even though I expect it will need to be expanded a bit before the end of the year.

As for today specifically, the only remotely relevant event is the 2pm release of the minutes from the most recent Fed meeting (3 weeks ago).  That's the one where they cut rates as expected, but changed the verbiage to suggest it was probably the last cut for a while--depending on the evolution of the economy.  Since then, almost every Fed member has given at least one speech with their own specific thoughts and of course Powell had 2 big days of congressional testimony last week.  In other words, we don't have to wonder what the Fed was thinking 3 weeks ago.  More importantly, we have had plenty of chances to see/hear even more timely thoughts.