Bonds Sell Rumor, Buy New on Inconsequential Fed Minutes

A lot has happened in the past 3 months--especially when it comes to the variables that could impact Fed policy going forward.  This made any massive reaction to today's Fed Minutes a long shot, but it's always good to be prepared for some volatility when it comes to the Fed.  Traders prepared by selling bonds ahead of the 2pm release.  When the minutes proved to be every bit as docile as they might have been, there was a quick shuffle back into yesterday afternoon's trading range and that was that.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Housing Starts 1.534m vs 1.600m f'cast, 1.643m prev
    Building Permits 1.635m vs 1.610m f'cast, 1.594m prev

Market Movement Recap
09:00 AM

Slightly weaker overnight as Asian shares rallied.  EU session was more supportive.  10yr started roughly 1bp higher and remains there (1.277).  UMBS 2.0 down less than an eighth.

01:57 PM

Bonds losing ground heading into Fed minutes.  MBS just over an eighth of a point weaker from intraday highs.  10yr up 2.6bps at 1.293%.  Slow, steady, linear grind all morning with a bit of extra defensiveness in the past 30 minutes.

02:42 PM

2-way street after Fed Minutes, but it seems to be resolving with moderate gains.  This brings 10yr yields back within 1bp of 'unchanged' and MBS prices up 5bps (2 ticks) on the day.

04:14 PM

Stick a fork in today's session.  It's done.  Levels may drift a bit higher or lower (currently unchanged vs the previous update), but the takeaway is that the Fed Minutes were inconsequential.