Traders Shrug Off Fed Minutes to Keep buying Bonds

Hindsight is 20/20 and it now seems clear that traders were indeed sitting on their hands heading into the holiday weekend, but otherwise may have been buying more aggressively in the wake of the acceptably strong jobs report on Friday.  Yesterday brought the first big glut of buying (with much of it in place before the weak ISM data).  Today struck a similar chord with rallies at 8:20am and 9:30am (the CME and NYSE opens, respectively) further suggesting traders were lined up to buy.  The Fed Minutes at 2pm were insignificant compared to that tradeflow-driven rally.  With that, MBS and Treasuries are both heading out the door at the best levels since February. 

Econ Data / Events
Market Movement Recap
08:21 AM

Flat in Asia, then stronger in Europe, potentially drawing some inspiration from weak Industrial Production data.  Gains continue at the domestic open with 10s down 4+ bps to 1.311.  UMBS 2.0 coupons are up 3 ticks (0.09) at 101-18 (101.56).

11:26 AM

2 small bounces since the open.  First, a correction back up toward the 1.35% technical level, then another rally to new lows around 10:30am.  2nd bounce just now bringing yields up from 1.296 to 1.325% (still 2.6bps lower on the day).  UMBS 2.0 up 3 ticks (0.09) at 101-18 (101.56).

01:31 PM

Traders moving to sidelines ahead of Fed Minutes (stocks, bonds, MBS, all lower in the past 90 minutes).  2.0 coupons have lost more than an eighth, but are still unchanged to slightly stronger on the day.

03:39 PM

Docile afternoon with any risk of post-Fed volatility now but a fading memory.  10yr down 3.5bps on the day at 1.316 and 2.0 UMBS up 3 ticks (0.09) at 101-18 (101.56).