Massive Month-End Buying Collides With Safe-Haven Demand
There was already a ton of safe haven demand in the bond market to start the new week as investors jumped out of stocks and into bonds on the weekend’s Ukraine headlines. Yields were up to 10bps lower at times throughout the day as a result. Notably, yields were rising until the 8:20am CME open, which marked a sharp departure from the sideways-to-weaker overnight trend. Then at the 3pm CME close, gains accelerated again. The timing of the rate-friendly spikes suggests big month-end trades. Yields hit new intraday lows just after 3pm and MBS were near the day’s highs, up half a point.
Econ Data / Events
Fed MBS Buying 10am, 11:30am, 1pm
Chicago PMI 56.3 vs 63.0 f’cast 63.2 prev
Market Movement Recap
08:46 AM Bonds rallied overnight as fighting intensified in Ukraine. 10yr down 7.4bps at 1.896 and 3.0 UMBS up more than an eighth of a point at 100-23 (100.72).
10:01 AM Additional gains as domestic trading continues. 10yr down more than 10bps at 1.865. MBS up more than 3/8ths at 100-28 (100.875).
04:02 PM Another faster-paced rally move at 3pm to complement the 8:20am version, further suggesting month-end positioning tradeflows. 10yr at lows of day, down 14.3bps at 1.827. 3.0 UMBS at highs of day, up 19 ticks (.59) at 101-01 (101.03).