Bond markets began the day in stronger territory as the overnight session brought a small amount of post-FOMC follow-through. Realistically, when an analyst says "follow-through" it's just a more official way of saying prices kept moving in the same direction for no overt reason. If we want, we can conclude that any strong result yesterday would have suggested at least a visit to the lower end of the 10yr yield range at 2.57. Since we weren't quite there yesterday, some additional strength this morning is understandable in light of an uneventful Jobless Claims report.
That's basically the story of the morning. Traders may have been a little hesitant to get any more aggressive on the chance that Claims would come in super strong. It didn't, so we visited the bottom of the yield range. Despite some prodding into the mid 2.56's, we're essentially left with 2.57 acting as a floor and yields bouncing up to 2.61.
For MBS, this translated to a ceiling at 102-14. Both of those moves can be seen in the top two charts below. The third chart shows yields returning to pre-CPI levels, because Tuesday CPI caused some pre-Fed positioning (it also shows off the new time-frame functionality in the upcoming version of MBS Live, as well as the capability to have up to 3 charts open at once). Bottom line, we're right back where we were.
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