Yields Searching For a Pre-Fed Ceiling

Although the week began in forgettable fashion, Tuesday saw yields move up at a moderate pace with no overt provocation. Indeed a quick glance at the 5-day candlestick chart leaves one with the impression that bonds simply targeted the 1.30% technical level and set their selling programs on cruise control.  While it's early yet, yields are trying to challenge that ceiling to start the day.  Breaking above wouldn't be the end of the world as rates are still better described as "broadly sideways at long-term lows."  While that range may come under pressure in the run up to Friday's Powell speech, it's next week's trading that matters more.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Durable Goods -0.1 vs -0.3 f'cast
    Core Cap-Ex    0.0 vs 0.5 f'cast

Market Movement Recap
07:33 AM

Bonds flat to slightly weaker overnight wit most of the damage coming during European trading.  10yr yields are up 1.2bps at 1.309%. MBS are still trying to find liquidity for the morning, but are set to open about 2 ticks (0.06) lower if bonds don't go too crazy in the next 30 minutes.

08:32 AM

No major reaction to durable goods data.  The headline was a hair better than expected, but core-capex (nondefense durable goods orders excluding aircraft) missed by a wider margin (0.0 vs 0.5).  Bonds haven't budged in the past 2 minutes. 

12:42 PM

The 10yr spiked to 1.339% late in the morning session, but met some resistance there and have since leveled off. 2.0 MBS are still down about an eighth for the day.