Rally Week Finds Its Limit After ECB And Auction

Bonds were having a great week by the end of the day on Wednesday.  Yields had broken the lower boundary of an upwardly-sloped channel that had been intact for more than a month and made it all the way down to the low 1.5s--quite an achievement considering the 1.70+ mark seen less than a week ago.  Unfortunately, the rally ran out of steam today.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • GDP 2.0 vs 2.7 f'cast, 6.7 prev

  • Jobless Claims 281k vs 290k f'cast, 290k prev

Market Movement Recap
08:41 AM

Very flat overnight despite a bit of weakness in EU bonds.  No major reaction to GDP, but giving up some gains now with 10yr yields now up .3bps at 1.553 as ECB president Lagarde speaks.  2.5 UMBS are down 3 ticks (.09).

09:30 AM

Quick move into weaker territory during ECB President Lagarde's press conference, but bouncing back into positive territory now.

03:53 PM

Steady weakness throughout the afternoon, eventually bringing yields back to the highs of the day and MBS back to the lows.  10yr up 2bps at 1.57%.  2.5 MBS down an eighth of a point.