Defensive Until Further Notice

Bonds sold off early and often to begin the new week.  Selling pressure ramped up around 8:50am ET on a glut of corporate bond issuance.  The 9:30am NYSE open then brought more liquidity into the market, and more bond sellers.  Comments from central bankers kept the pressure on (or, at the very least, didn't provide any rate-friendly inspiration).  10yr yields were more than 5bps higher by the 3pm CME close and MBS were nearly a quarter of a point lower.  All of the above suggests a defensive stance until further notice when it comes to rate lock decisions.

Econ Data / Events

  • Fed MBS Buying 10am & 1130am

  • NY Fed Manufacturing 30.9 vs 21.2 f'cast, 19.8 prev

Market Movement Recap
08:50 AM

Modestly stronger overnight amid light volume.  No reaction to Empire state data, but general weaker drift since 3am.  Some weakness just now following corporate bond announcements.  TSYs nearly unchanged at 1.57%.  MBS still up 2 ticks (.06).

09:52 AM

Additional weakness after the 9:30am NYSE open, with additional motivation from foreign central bank comments and corporate issuance.  10yr yields are up 2.2bps and MBS are down more than an eighth of a point from AM highs.

11:53 AM

Selling trend continues.  10yr up 5.3bps at 1.621 and 2.5 UMBS down almost a quarter point at 102-03 (102.09).

03:40 PM

Yields were flat heading into the PM hours, but they're inching higher again now.  10yr up almost 6bps to 1.628.  MBS down almost a quarter point at 102-04 (102.125).