Impressive Move to Longer-Term Lows. What's Next?

The centerpiece of today's global trading session was an impressive overnight rally that took 10yr yields as low as 1.25%.  That was strong enough to merit a corrective bounce between 7am and 9:30am, but yields topped out just over 1.30%, not once, but multiple times.  The result is a classic pivot/inflection point on the 2-day chart--one we can continue to watch for evidence that bullish aspirations are shifting.  As far as today was concerned, the repeated bounces at 1.30% added validity to the rally, at the very least.

  

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Jobless Claims 373k vs 350k f'cast, 371k prev

Market Movement Recap
08:23 AM

Bond rally extends overnight, once again driven by the European session.  10yr yields were as low as 1.25% before bouncing up to 1.28% currently (still down 4+ bps).  MBS are up more than an eighth of a point with 2.0 coupons at 101-23 (101.72).

09:35 AM

Sellers pushing back on the gains.  10yr up 3bps from AM lows, now down only 2bps on the day at 1.30%.  MBS holding steadier, still up an eighth at 101-22 (101.69).

10:55 AM

Buyers pushing back on sellers!  Now back down to low yields of domestic session and MBS up to highs of day (2.0 coupon up more than a quarter of a point).  Gains started shortly after the last update.

03:50 PM

Best levels of the day for MBS with 2.0 coupons up 10 ticks (.31) at 101-28 (101.875).  10yr yield down 3.5bps on the day at 1.288 (supportive ceiling bounce at 1.30-ish, right in line with yesterday's lows).