Bonds Circle Weekend Wagons as Fed Day Looms

This week was a bit of a barn burner for the bond market with 10yr yields falling at their fastest pace since the start of the pandemic.  It's not too troubling to see the modest weakness creep in on Friday.  This could be explained by something as simple as traders exiting shorter-term long positions in an attempt to get neutral for next week's big-ticket events.  Chief among those will be Wednesday's Fed Announcement (which includes updated economic projections and "dots").

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Consumer Sentiment 86.4 vs 84 f'cast
    1yr Inflation expectations down 0.6%
    5yr Inflation expectations down 0.2%

Market Movement Recap
09:43 AM

flat for most of the overnight session, then modestly weaker heading into domestic hours (emphasis on modest).  10yr yield up less than 2bps to 1.455.  MBS down just over an eighth of a point in 2.0 coupons (charts look worse due to roll).

12:54 PM

Bonds made a quick head-fake toward weaker levels heading into the 11am hour but are now moving back toward the day's better levels (still slightly weaker from yesterday, but very close to the week's best levels).