Do Today's Gains Mean The Selling Spree is Over?

After some initial weakness brought 10yr yields back in line with yesterday's highs, bonds managed to calm down enough eke out a small victory by the 3pm close. This is a welcome change in light of the recent selling spree, but that change had already occurred as of yesterday.  Today's mostly-sideways tone is better viewed as a confirmation of yesterday's leveling-off.  From here, the goal will be to determine whether this new consolidation is here to confirm recent weakness or to take up arms against it.  From a strategy standpoint, although there's a chance this means the selling spree is over, we'd still need to see a stronger move down and out of this week's range to confirm it.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Jobless Claims 362 vs 335 f'cast, 351 prev

  • Q2 Final GDP 6.6 vs 6.6 f'cast/prev

  • Chicago PMI 64.7 vs 65.0 f'cast, 66.8 prev

Market Movement Recap
08:37 AM

Inconsequentially stronger to start the overnight session, then weaker during European hours.  Yields up 1.5bps to 1.54% and MBS down almost an eighth--small scale moves in the recent context.

01:50 PM

Slow, steady gains throughout the day as the decompression of the recent selling spree coincides with a modest buying bias among month/quarter-end trading needs.  10yr now down 1bp at 1.515 and 2.5 MBS up nearly an eighth of a point.

03:59 PM

Uneventful afternoon with bonds showing no impressive evidence of month-end trading impacts.  Both 10yr yields and MBS remain at the same levels as the last update.