More Weakness. Is This All About The Fed?
Bonds began the day in slightly stronger shape but began to sell off soon after the 8:30am Durable Goods data. It’s debatable whether this had a lot to do with the data itself or if it traders were merely waiting to sell bonds until they confirmed the data wasn’t horrible. If we’re considering potential reactions to the data, Pending Sales didn’t help by coming in quite a bit stronger than expected at 10am. The 5yr Treasury auction at 1pm added just a bit more weakness, but only inasmuch as it kept bonds flat at the day’s worst levels. Looking beyond the data, we can consider traders potentially bracing for impact from Friday’s Jackson Hole speech from Fed Chair Powell. Today’s video discusses the extent to which Fed Funds Futures actually suggest any major change.
Econ Data / Events
0.0 vs 0.6 f’cast, 2.2 prev
Non-defense excluding aircraft
0.4 vs 0.3 f’cast, 0.7 prev
Pending Home Sales
-1.0 vs -4.0 f’cast, -8.9 prev
Market Movement Recap
08:53 AM Flat to slightly stronger overnight, but selling after mixed Durable Goods headline. Movement came from a few big trades more than 5 minutes after the data, so it wasn’t the typical data reaction. MBS down just over an eighth.
10:46 AM Selling continues with 10yr yields now up 5bps trading just under 3.11%. UMBS 4.5 coupons are down about a quarter point.
01:57 PM Some additional weakness surrounding 5yr Treasury auction, but now back in line with previous levels.
04:22 PM Some ups and downs in the past few hours, but generally sideways in the 2nd half of the day. 10yr yields still at 3.11. MBS down just under a quarter point.