Calm Today. Bigger Volatility a Risk For Tomorrow

Treasuries began the domestic session in modestly weaker territory after an uneventful overnight session.  There was 2-way trading after the PPI data, but it soon revealed itself to be noise in a broader mover whereby yields were backing away from the technical floor at 1.42.  Stocks lost ground, which also makes sense in a narrative where traders are circling the wagons ahead of tomorrow afternoon's Fed announcement.  MBS outperformed moderately and were only down 2 ticks (0.06) from yesterday's closing levels at 4pm ET.

Econ Data / Events

  • Fed MBS Buying 10am, 11:30am, 1pm

  • Core Producer Price Index 7.7 vs 7.2 f'cast, 6.8 prev

Market Movement Recap
08:49 AM

Moderately weaker overnight with 10s topping out at 1.443.  Modest recovery after PPI data with 10s up only 1.4bps on the day to 1.427.  MBS down only 3 ticks (0.09) versus a quarter point of weakness at the open.

09:15 AM

Post PPI gains reverse course.  10yr now up 3.7bps at 1.45 and MBS down more than an eighth of a point.

11:43 AM

Early weakness was mostly erased as stocks swooned heading into the 11am hour.  10yr yields up only 2.9bps and MBS back near the highs, down only 3 ticks (0.09) on the day at 102-05 (102.16).

03:16 PM

Very flat all afternoon and little-changed from the previous update.