Bonds Remain Resilient With Help From ECB

This morning's ECB announcement proved to be moderately bond-friendly. Combined with weaker Jobless Claims data, it was enough to get bonds started off on a strong note.  Gains continued throughout the European trading session.  Yields bounced modestly after that but found solid support at 1.27% in terms of 10yr Treasuries--well under the "new frontier" pivot point for the week at 1.30%  That said, we're more interested in a general range between 1.10% and 1.40% than the small scale day-to-day volatility that occurs inside that range.  Next week's Fed announcement is the next scheduled event that has even a remote chance of informing our stay in such a range (or our departure).  Even then, it's hard to be too preoccupied with the Fed until the current covid case count surge abates.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Jobless Claims 419k vs 350k f'cast, 368k prev

  • Existing Home Sales 5.86m vs 5.9m f'cast, 5.78m prev

  • Leading Indicators 0.7 vs 0.9 f'cast, 1.2 prev

Market Movement Recap
08:47 AM

Slightly weaker overnight, but rallying back on friendly ECB and weaker Jobless Claims data.  10yr down 2bps at 1.272 and UMBS 2.0 coupons up 3 ticks (0.09).

10:50 AM

Additional strength after 9:30am NYSE open with another glut of buying just now.  10yr down 3.2bps on the day to 1.26% and UMBS 2.0s up 6 ticks (.19) at 101-22 (101.69).

02:30 PM

Gains continued but we're now off the best levels after the European session ended.  The bounce coincided with lows in stocks and EU yields.  Still stronger on the day.  10yr down 2.9bps at 1.263% and UMBS 2.0 same as last update.

03:50 PM

Heading out near best levels.  MBS at highs, up just over a quarter of a point--outperforming Treasuries over the past few hours. 10yr yields found support at 1.27% and are now at 1.258% (down 3.4bps on the day).