'Unchanged' Feels Like a Victory

Bonds began the day at the highest yields in more than a year and slowly worked their way back to 'unchanged.'  Solid justification for the move (in either direction) was elusive.  Traders are talking in generalities with topics such as corporate bond issuance and fiscal policy frequently mentioned.  European markets were also a factor for bond weakness late in the overnight session and strength in the afternoon.  We're left with a reminder that the big picture rising rate trend can't be easily ruled out, and mortgage rate sheets that are still showing battle scars despite positive reprices and MBS prices near unchanged levels.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Consumer Confidence 109.7 vs 96.9 f'cast, 90.4 prev
    Inflation expectations 6.7 vs 6.5 f'cast, 6.3 prev

Market Movement Recap
08:23 AM

Sharply weaker overnight in heavy volume and a modest bounce back since then.  Biggest moves in Europe, early, but not tied to any standout event (econ data was broadly stronger though).  10yr up 4bps at 1.756 and 2.5 UMBS down almost a quarter point at 102-13 (102.41).

10:34 AM

Briefly weaker after the Consumer Confidence numbers (much stronger than expected and inflation expectations noticeably higher), but the general trend has been resilience and modest gains since the domestic open.  10yr up 3bps at 1.75% and 2.5 UMBS down just over an eighth of a point.

12:35 PM

Decent little recovery heading into the end of European trading hours.  10yr fell from 1.76 to 1.72, but has bounced a bit in the past half hour (1.73 currently).  2.5 UMBS are now down less than an eighth of a point.