Another Green Day, But Can We Trust It?

Bonds were briefly weaker mid-morning, but rallied back to close at slightly stronger levels. We've been defensive about the upward trend in rates for more than a month now and generally on the lookout for enough of a rally to let our guard down a bit.  With the past 3 business days seeing anywhere from modest to moderate improvements, is it time to conclude we've seen the worst of the recent drama?  In a word: no.  Bonds have a lot more ground to cover before we'd think about that as something more than just another possibility.  Even then, we're expecting a fair amount of volatility surrounding next week's Fed announcement. 

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Case Shiller Home Prices m/m 1.2%
    FHFA Home Prices m/m 1.0%

  • Consumer Confidence 113.8 vs 108.3 f'cast

  • New Home Sales 800k vs 760k f'cast, 702k prev

Market Movement Recap
08:33 AM

flat to slightly weaker in Asia, then stronger in Europe.  Roughly unchanged in the first 30 minutes domestically.  10yr at 1.632 and 2.5 UMBS at 102-13 (102.41).

01:37 PM

Mid day weakness heading into the 10am hour followed by a rebound over the past few hours.  Still a narrow trading range on the day.  10yr down 1.5bps at 1.618.  MBS up 1 tick (0.03).