Intraday Volatility But Mostly For Treasuries; Fed On Deck
Bonds began the day trading right in line with yesterday afternoon’s higher yields (or lower prices). The first two hours saw a decent rally with trading levels nearly returning to yesterday’s stronger range. A bounce in stocks just after 10am made things a bit tougher for bonds. Granted, stocks aren’t the only game in town when it comes to inspiring the bond market, but bonds are content to take cues for range-bound volatility while they wait for Wednesday’s Fed announcement. Treasuries experienced most of that volatility while 3.0 UMBS were especially calm and sideways from 10am on.
Econ Data / Events
Fed MBS Buying 10am, 11:30am, 1pm
FHFA Home Prices Nov y/y………….. 17.5 vs 17.4 prev Case Shiller Home Prices Nov y/y….. 18.8 vs 18.5 prev
Market Movement Recap
09:05 AM Initially weaker in the overnight session with 10yr yields as high as 1.797. Better buying into the domestic session, now back down to 1.75%. MBS are 3 ticks higher (0.09) to start.
11:33 AM Gains into the 10am hour, then a bounce with stocks just after 10am. 10yr still down 1.4bps, but back up to 1.762%. MBS up only 2 ticks (0.06) on the day now.
01:07 PM Gains resuming after strong 5yr Treasury auction. 3.0 UMBS up 6 ticks (.19) at 100-02 (100.06). 10yr less responsive, but still slightly stronger, down 2.5bps on the day at 1.751.