No Whammies From Powell. Bonds Like It

Today's only notable calendar item was the congressional testimony from Fed Chair Powell.  He mainly stuck to the script, but elaborated a bit on a few topics (more details here).  For example, he was very clear about the Fed's high hopes for upcoming labor market data.  That means next week's jobs report would be hard-pressed to make the Fed interested in tapering any sooner.  Thus, the strong outlook is actually a feather in the bond market's cap.  

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Existing Home Sales 5.8m vs 5.72m f'cast, 5.85m prev

Market Movement Recap
09:06 AM

Flat in Asia, stronger in Europe, then weaker heading into domestic hours.  Traders a bit cautious as auction cycle begins and ahead of Powell's afternoon speech.  Currently roughly unchanged after being more than 3bps lower (10yr yield) overnight. 

12:46 PM

Bonds found buyers just after the 9:30am NYSE open and gains accelerated as Fed's Williams offered some dovish comments at 10:30am.  10yr yields now down 2.5bps and UMBS 2.0 coupons are up nearly a quarter of a point.

03:41 PM

No whammies from Powell and a fairly bond-friendly approach (i.e. by putting months-long time frame on taper decision) are adding up to gains.  MBS up more than a quarter of a point and the 10yr is now down more than 3 bps.