Steady Selling All Day For Bonds

Bonds may have rallied on Mon-Thu, but Friday's theme has been quite different.  Right from the start of the overnight session, yields began slogging steadily higher.  When Europe came online, losses accelerated, but the pace was still modest overall.  Then at 8:30am, the surprisingly strong Retail Sales data added to the pace of the weakness.  To be clear though, the data is nothing but a supporting actor in the broader drama starring a steady decline in covid case counts, persistent inflation concerns, and an increasingly hawkish Federal Reserve.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Retail Sales 0.7 vs -0.2 f'cast, +0.9 prev

  • NY Fed Manufacturing 19.8 vs 27.0 f'cast, 34.3 prev

  • Consumer Sentiment 71.4 vs 73.1 f'cast, 72.8 prev

Market Movement Recap
08:35 AM

moderately weaker overnight.  additional selling after stronger Retail Sales data.  10yr up roughly 4bps at 1.55+.  MBS down an eighth

11:51 AM

Lighter volume and liquidity, but selling continues.  10yr at new highs, up 6bps at 1.576.  2.5 UMBS down nearly a quarter point.

02:37 PM

More time ticking down on the day, more selling pressure for MBS.  2.5 coupons now down a quarter point.  10yr still up 6bps at 1.57+