Bonds Keep Running The Table Without Much Motivation

The absence of overt, discrete motivation is one of the most interesting facets of the bond rally over the past few weeks.  If anything, the overt/discrete stuff has made stronger cases for bond market weakness (i.e. high inflation reports and weak auctions).  This speaks to a bigger picture shift in market psychology and has given way to more technically-motivated trading.  Today also saw a good amount of influence from the corporate bond issuance process (and a surprising absence of influence from Fed Chair Powell's 2nd day of testimony).  Net/net, yields closed down 5bps, right in line with the next technical level on our list (1.30%).  We're not eager to bet against a bond market that's been so willing to rally, but nonetheless feeling cautious about any summertime Friday on a rally week.  

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Jobless Claims 360k vs 360k f'cast, 386k prev

  • Philly Fed Index 21.9 vs 28.0 f'cast, 30.7 prev

Market Movement Recap
08:51 AM

slightly stronger overnight with some pull-back after hawkish BOE comments.  Bonds still green though, 10yr down 1.8bps at 1.33% and UMBS 2.0 up 1 tick at 101-13 (101.41).

10:35 AM

Losing some ground as Powell's testimony begins.  This may be more to do with correlation than causality.  There were a few big trades before Powell that set more defensive tone.  10yr yields are still barely positive on the day and 2.0 UMBS are back to 'unchanged.' at 101-12 (101.375).

01:17 PM

Nice rebound after earlier weakness.  MBS and Treasuries now at best levels of the day.  2.0 UMBS up almost a quarter point and 10yr yields down 4.2bps to 1.306.