A Small Risk in a Pile of Good News

For rates and the bond market, the news has been almost exclusively good for weeks-to-months.  Most recently, we've seen lower lows than ever and spent more time remaining in that range than any past trip to all-time lows.  In other words, we would typically expect a bounce by now.  Interestingly enough, there is a very small hint at such a bounce emerging.  While it's too soon to worry about it, it's not too soon to keep an eye on it.

Econ Data / Events
Market Movement Recap
08:33 AM

Socks and bonds yields were both slightly lower overnight.  The biggest move followed news about the closure of the Chinese consulate in Houston (yes, really).  10yr yields are down 1.9bps at .586 and 2.0 UMBS  are up 2 ticks (0.06).

10:44 AM

No detectable reaction to home sales data.  Bonds remain roughly unchanged-to-slightly-stronger.  10yr yields may be seeing some resistance at the range floor of .58%.

01:25 PM

2.0 UMBS are now up an eighth of a point on the day at 103-01 (103.03). 10yr yields are down 1.6bps at .589 and as yet unwilling to break below the .58% range boundary.  MBS outperformance followed the Fed's last bond buying operation of the day.

03:22 PM

There was a fairly quick bout of selling just after 2pm, but it has since been corrected.  It was more noticeable in MBS than Treasuries. Both lost a bit of ground but remain modestly stronger on the day.