For the past 4 sessions, bond markets have traded a narrow range near their best levels of the year. This effectively began with the geopolitical risk rally on the 17th. It's not entirely fair to say the narrow trend is over, but if not, it's being stretched to the limit today. Fannie 3.5s are heading out the door just over 3/8ths of a point weaker.
This began in the overnight session as European bond markets (using Germany as a benchmark) moved up in yield from their own lowest levels (though in their case, it was all-time lows). Domestic data didn't help as Jobless Claims were much stronger than expected.
New Home Sales helped stem the tide of losses by coming in much MUCH weaker than expected. That said, the losses were only really stemmed for Treasuries. MBS maintained a modestly negative slant for the rest of the day, resulting in several negative reprices.
It continues to be the case that markets are likely to make their biggest decisions next week starting with Wednesday's ADP/GDP/FOMC trio and culminating with Friday's NFP.
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