Big Victory This Week (In Response To Last Week's Big Loss)

Relative to the spectrum of possibilities, ending the week with 10yr Treasury yields under 1.1% is a big victory.  Of course that wouldn't have been the case before last week, but everything's relative in the bond market.  From here, we'll be watching this week's high yields very carefully for continued support.  If rates are going to surge back below 1.0%, the justification for such a thing has yet to reveal itself.  Next week is light on data, and bonds are closed on Monday for Martin Luther King Jr. Day.

Econ Data / Events

  • 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)

  • Retail Sales -0.7 vs 0.0 f'cast, -1.4 prev

  • Core Annual PPI 1.2 vs 1.3 f'cast, 1.4 prev

  • NY Fed Manufacturing 3.5 vs 6.0 f'cast, 4.9 prev

Market Movement Recap
08:34 AM

Bonds stronger overnight, mostly early, following Biden's brief, vague speech about stimulus and spending plans.  Bonds also appreciated a comment he made about being careful with taxpayer money.  Little changed after weaker Retail Sales just now with 10yr yields holding roughly 3.5bps lower at 1.097.  MBS are up just over an eighth of a point.

11:09 AM

A bit of volatility surrounding the 9:30am NYSE open, but stocks and bond yields have moved lower since then.  The 10yr is gently pushing it's best levels of the day, down 3.5bps at 1.094%.  UMBS have added another 2-3 ticks (.06-.09) since the last update, now trading just over 103.

02:08 PM

A very modest amount of weakness heading into the PM hours, but not enough to compel a search for causality.  Chalk it up to typical incidental range trading on a Friday afternoon.  10yr yields still down more than 3bps and UMBS 2.0 coupons just a hair under 103-00.

04:38 PM

Yields are heading out at the lows of the day with 10yr Treasuries down 4.42bps at 1.085%.  UMBS 2.0 coupons are up nearly a quarter point trading just over 103.  Stock weakness was part of the last day push as S&P futures lost just over 1%.