What do we Make of Today’s Bond Bounce?
After a big sell-off in response to yesterday’s Fed announcement, bonds rallied back today. The gains were slow and steady at first, but the pace quickened at 9:30am (a popular time of day for increased momentum in bonds, even though it’s the NYSE open). Data was overlooked and 10yr yields ultimately made it down to the 1.80% technical level (adjusted to 1.795 today to better fit the intraday bounces), but were unable to sustain a breakout. As such, we are left with the possibility that today was another day in the ongoing rising-rate consolidation process (one that just happened to be green) even though the rate bulls are hoping it helps build a case for support at recent ceilings.
Econ Data / Events
Fed MBS Buying 10am, 11:30am, 1pm
Durable Goods……… -0.9 vs -0.5 f’cast, 3.2 prev GDP, Q4, advance….. 6.9 vs 5.5 f’cast, 2.3 prev Jobless Claims ……….260k vs 260k f’cast, 290k prev
Market Movement Recap
08:47 AM Surprisingly stable considering yesterday’s events and moderately stronger by the domestic open. 10yr down 4bps at 1.832 and 3.0 UMBS up an eighth of a point.
11:19 AM Additional gains into the 10am hour, but backing away from a technical breakthrough now. 10yr bounced at 1.795, now “only” down 6.6 bps at 1.807. MBS up just over a quarter point.
01:03 PM Respectable 7yr auction stats despite intraday bond rally. No major reaction though. 10yr down 8bps at 1.792 and MBS up 10 ticks (.31).
03:08 PM yields retreated back above the 1.80% pivot point by the 3pm CME close (currently 1.814%). MBS are a quarter point higher on the day, but also off their best levels.