Bonds Take Tapering Mostly In Stride

Today was the day that the Fed announced a reduction in the pace of its bond purchases without the bond market undergoing a reaction that was outside the realm of any other trading day.  Or how about this tidbit: less than 2 hours later and MBS prices are higher than the were before the Fed.  So while there was certainly some volatility between 2-3pm, it all came out in the wash for MBS, and the same was almost true for Treasuries.

Econ Data / Events

  • Fed MBS Buying 10am & 1130am

  • ADP Employment 571k vs 400k f'cast, 523k prev

Market Movement Recap
08:24 AM

Bonds were closed in Asia, then stronger early in the EU session.  Modest bounce back since 5am with no impact from ADP.  10yr now down 1.2bps and MBS roughly unchanged. 

11:32 AM

Quick bout of selling after ISM data, but bonds found footing.  10yr up 2bps at 1.566 and MBS down an eighth.

02:08 PM

First move after the Fed is weaker.  10yr at highs of day, up 5bps at 1.595.  2.5 UMBS down nearly a quarter point.

03:23 PM

Weakest levels hit at 2:30pm, then a solid bounce back to stronger than 2pm levels.  Now somewhere in between for MBS and near weakest levels of day for Treasuries.  10yr up 4.2bps at 1.589 and MBS down an eighth on the day.