What's Up With Today's Big Sell-Off?

It's not nearly as surprising to see bond yields breaking technical ceilings today as it was to see them bouncing at a technical floor yesterday.  By confirming the taper timeline, the Fed effectively stood aside and allowed nature to take its course in the bond market.  The most natural trade of the past 1.5 years has been covid.  Viewed in that lens, 2021 is extraordinarily simple.  Rates spiked quickly with vaccinations as case counts plummeted.  Rates moved lower as concern over the delta variant grew.  And now that the new school year is well underway and case counts are falling, it's no surprise to see yields confirming a sideways-to-slightly higher trend by breaking up and over 1.37% (10yr yields).  Is this the only thing moving markets today?  Not even remotely, but it is the easiest explanation.  Additional market movers are covered exhaustively in today's video.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Existing Home Sales 5.88m vs 5.89m f'cast, 6.00m prev

Market Movement Recap
08:31 AM

Moderately weaker overnight with all of yesterday's gains erased.  No major reaction to Jobless Claims.  10yr yield up 4bps at 1.341.  MBS down 7 ticks (.22).

11:24 AM

After consolidating into the 10am hour, bonds are snowball selling in the 11am hour.  Huge losses in MBS and Treasuries.  10yr up more than 10bps as traders take sides after yesterday's Fed announcement.  Covid numbers not helping the big picture momentum.

12:52 PM

leveling off a bit now, but the damage is done.  10yr still up roughly 10bps at 1.403 and MBS down half a point.  Both experienced their weakest levels just after 11am and have been mostly flat since then.

02:29 PM

Sideways/stronger afternoon recovery is now over and bonds are quickly back in line with the day's weakest levels.  No new market movers in play, just traders trading it out.  10yr up 10.4 bps at 1.408 and 2.0 UMNBS down more than half a point at 100-15 (100.47).