For a third straight day, bond markets improved into the domestic session and gave back gains in the afternoon (chart below). Of those three days, today was the most gradual on both accounts with no meaningful data to drive the morning trade and no major motivation for the afternoon weakness.
In a nutshell, the end-of-week levels were intact by yesterday morning, and the intervening hours have simply seen ebbs and flows relating to quarter-end trading. While that benefited bonds early, the balance shifted toward stocks in the afternoon. Shorter-maturity Treasuries benefited at the expense of the long end. MBS identify more readily with longer-maturity Treasuries, but were able to hold their ground a bit better than 10yr Notes today.
Some lenders repriced in the afternoon, but it wasn't a unanimous decision, nor were the reprices very large. In fact most lenders remained at least as well-priced as Thursday's latest offerings.
Next week brings more volatility for several reasons. Simply moving into the new month on Tuesday can be a momentum event. Additionally, there is a ton of important economic data packed into a shorter-than-normal week (Independence Day), with NFP hitting on Thursday.
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