Weaker Start, Stronger Finish

Volatility has been elevated for the bond market in the past 4 weeks and especially in the past 2 weeks.  Today was one of the milder days, but it was still good for a reasonably big shift from overnight levels to closing levels.  During that time, yields fell from 1.50+ to 1.42.  MBS continue to underperform but nonetheless made it back into positive territory.  The most memorable market mover was the unsurprising revelation that the US has now logged its first case of Omicron, but the rally was in the works before those headlines hit.

Econ Data / Events

  • Fed MBS Buying 10am, 11:30am, 1pm

  • ADP Employment 534k vs 525k f'cast, 570k prev

  • ISM Manufacturing  61.1 vs 61.0 f'cast, 60.8 prev
    Prices Paid 82.4 vs 85.5 f'cast 85.7 prev

  • Construction Spending 0.2 vs 0.4 f'cast, -0.1 prev

Market Movement Recap
08:33 AM

Weaker overnight with the sharpest losses at the EU open.  10yr only up 2.4bps currently at 1.48.  MBS down less than an eighth.

11:42 AM

No whammies from any of the econ data or the 2nd day of Powell/Yellen testimony.  MBS back to unchanged and 10yr yields up 1.9 bps at 1.475 (domestic session lows).

01:50 PM

Better gains in the PM hours with a slight acceleration after news of Omicron making it to the U.S.  10yr now down 2bps at 1.436 and MBS up nearly an eighth.