Very Flat Day After Opening Losses
MBS and Treasuries began the day in moderately-to-sharply weaker territory and didn’t move much at all after that. The losses didn’t correlate with any other markets (i.e. stocks or European bonds), scheduled events, or unexpected headlines. It was a perfect and frustrating example of the traders’ world, and we’re just living in it. The most likely justification for days like today–and one you’ll likely get tired of hearing in the coming days–is that ultra light holiday week liquidity leaves the bond market highly susceptible to being pushed in random directions by larger than normal amounts. Today’s video talks more about how illiquidity causes volatility.
Econ Data / Events
NAHB Builder Confidence
31 vs 34 f’cast, 33 prev
NAHB 6-mo outlook
35 vs 31 prev
Market Movement Recap
09:07 AM Moderately weaker in Asia and flat in Europe until the 7am hour. Treasury sellers out in force starting at 730am. No apparent reason. Currently 8+ bps weaker at 3.572 and MBS down just over half a point.
12:36 PM MBS holding fairly flat at opening lows (now 5/8ths lower on the day) while 10s continue drifting higher, currently up almost 11bps at 3.594
03:55 PM No major changes since the last update. MBS just a hair stronger. MBS down 18 ticks (.56) and 10yr up 10bps at 3.588.