Unfriendly Trend as Fed Fear Sets In
Without any obvious, individual motivations in the news or on the econ calendar, bonds sold off moderately again today. The size of the losses wasn’t as relevant as the fact that MBS and Treasuries easily hit their weakest levels in just over a month. The linear 2-day sell-off in stocks provides a clue when taken in conjunction with last week’s developments. It suggests the market is afraid of what the Fed has to say about the current stance of monetary policy heading into the September meeting and that we may have to face those fears in Powell’s Jackson Hole speech this Friday.
Econ Data / Events
No significant econ data
Market Movement Recap
09:42 AM Weaker in Asia. Stronger in Europe, but selling off into domestic open. Longer-dated bonds performing better (10yr only up 1.3bps on the day vs 2yr up 6.6bps). MBS feeling the pinch of curve-steepening trades with 4.0 coupons down 10 ticks (.31).
01:05 PM Gradually weaker all morning and now into the afternoon. MBS at weakest levels down half a point on the day. 10yr up 6+ bps at 3.04%
03:15 PM No major change from the last update for Treasuries, but MBS are another 2 ticks weaker.