Modestly Strong, Uneventful Trading Day, Version 3

Last week conditioned us for Drama. Monday and Tuesday suggested the ride wasn't yet over.  Against that unpleasant backdrop, the last 3 days of the week have been completely unfamiliar--especially today.  The trading range was the narrowest of the week.  The gains were by far the most linear (very little back-and-forth volatility throughout the day).  Analysts in high flying aircraft might look at the day as some sort of response to tame inflation data, but that's not the story here (if data mattered today, stronger ISM numbers would have done more to push back in the other direction).  As it stands, the steady drift toward lower yields is more suggestive of the shuffling of trading positions at the start of a new month.  While we won't complain about the color on the screen, gains would be more meaningful if they stick around next week--especially after Friday's jobs report.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Core PCE Inflation y/y 3.6 vs 3.6 f'cast, 3.6 prev

Market Movement Recap
08:37 AM

Modest gains early in overnight session, then stonewalled by 1.48% technical floor.  Slightly weaker since then and now just a hair over unchanged.  

01:22 PM

Modest gains heading into PM hours.  New-month trading positions hitting both sides of the market.  10yr yields down almost 2 bps to 1.475.  MBS up 6 ticks (.19).

04:06 PM

Modestly stronger trend remains intact.  10yr yields now down 2.5bps at 1.467 and MBS have mostly leveled off in line with prices achieved 3 hours ago (+ 6 ticks or .19 in 2.5 coupons).