Too Soon To Hope For Support?

This week began with a decisive breakout to higher yields in the bond market.  Trump's comments on stimulus have been a key source of volatility although the Treasury auction process proved to be a relevant consideration mid-week. Bonds managed to hold under the important 0.79% ceiling despite additional upbeat Trump comments on stimulus and a lackluster 30yr bond auction.  That's a good sign, but it could also simply reflect traders closing short positions ahead of a 3 day weekend.  Bottom line: it's not too soon to HOPE for support in the bond market, but perhaps a bit too soon to count on it.

Econ Data / Events
Market Movement Recap
08:28 AM

Bonds continued to build on the technical support seen at .79% in the overnight session, ultimately making it as low as .765% in 10yr yields.  We're about a bp higher at 8:30am, but not trending higher at the moment.  MBS are perfectly unchanged.

01:09 PM

30yr auction was a bit soft and bonds weakened slightly in response.  10yr yields still down just over 1bp at .772 and 2.0 UMBS are down 2 ticks (0.06) at 103-08 (103.25).

03:08 PM

MBS briefly hit their lows of the day just after 2pm--the same time of day as yesterday's acceleration in weakness.  Could be there are a few traders making adjustments to MBS holdings or originators dumping supply after the prepayment speed report 2 days ago.  Small potatoes in the big picture though.  Treasuries remain just over 1bp lower on the day (in yield).  2.0 UMBS are an eighth lower (in price).