Consolidation Continues as Yields Avoid Both Floors and Ceilings
Whereas 10yr yields were willing to temporarily test a break above the 2.91% ceiling yesterday, they barely brushed against that level today, and it was in the overnight session to boot! The nearest technical level underfoot was 2.84% which saw plenty of action in AM hours, but never a viable breakout attempt. If it’s 2022 and bonds aren’t able to cross at least one of our “key levels” on a day with some reasonably relevant economic data and Fed comments, it speaks to an extreme sense of indecision and/or an absence of directional momentum. The best argument we can make for bigger movement in the coming week is the fact that yields will be forced to break their current consolidation pattern within the next few trading days.
Econ Data / Events
250k v 265k f’cast, 252k prev
Philly Fed Index
6.2 vs -5.0 f’cast, -12.3 prev
Market Movement Recap
08:52 AM Moderately stronger overnight, but giving up gains after Philly Fed surprised to the upside. 10yr down 2bps at 2.884, but up from 2.835 lows. MBS up only 2 ticks (.06) after being up more than a quarter point earlier.
09:36 AM Resilient before moving over 2.9% (10yr). Now making some gains as Fed’s Daly offers hints about a softer Fed policy path. 10yr down 5.8 bps at 2.842 and MBS up a quarter point at 99-14 (99.44).
03:31 PM Best levels hit just after 11am, gradual selling since then and now leveling off sideways at slightly stronger levels. MBS up 2 ticks (.06) on the day and 10yr yields down 2.4bps at 2.879.