Abrupt Sell-Off To Begin Holiday-Shortened Week

The day began with confirmation that Fed Chair Powell would be re-nominated for another term.  Until now, there was some speculation that Fed governor Lael Brainard would take the helm, but Biden instead nominated her to be the vice chair.  Brainard is more bond-friendly than Powell.  It's fair to wonder if that was the reason for today's sell-off in bonds.  While it definitely had some impact early in the day, the bigger drama was associated with the takedown of 2 separate Treasury auctions on a Monday (they would normally be on Tuesday and Wednesday).  Regardless of the motivations, the result is a trend that now looks more upwardly sloped.  The caveat is that we always advocate taking Thanksgiving week volatility with a grain of salt.

Econ Data / Events

  • Fed MBS Buying 10am, 11:30am, 1pm

  • Existing Home Sales 6.34 vs 6.20 f'cast, 6.29 prev

Market Movement Recap
09:06 AM

Weaker overnight with another pop after Powell's re-nomination announcement.  10yr up 3.5bps at 1.582 and MBS down just over an eighth of a point.

11:43 AM

Steady weakness all morning.  MBS at new lows, down a quarter point at 102-06 (102.19).  10yr yields are up 5bps at 1.601

01:10 PM

Worst levels of the day after weaker 5yr auction.  10yr at new highs, up 6.5bps a 1.613.  MBS down 10 ticks (.31).

03:08 PM

linear selling spree continues with MBS down 3/8ths of a point and 10yr yields up nearly 8bps at 1.625%.