In the day just passed, bonds didn't move a ton in the bigger picture but endured an hour of whipsaw volatility surrounding the Fed announcement and press conference.  The market deserves some blame for relentlessly hoping to pin down Fed Chair Powell on some assurance about the future path of rates.  And while Powell doesn't know what the future holds, he also deserves some blame for not simply explaining that in more candid terms.  In other words, he tried to give an answer to each question as opposed to saying "I don't know."  

In the day ahead, bonds will reflect on yesterday's implications as they digest the 2nd most important economic report of the week, ISM Manufacturing at 10am.  Yesterday's implications were different for different parts of the yield curve.  That's the reason we saw Fed rate expectations move higher despite 10yr yields finishing lower on the day.

2019-8-1 open

2019-8-1 open2

In other words, rates are arranged in a spectrum of duration.  The things that affect the shortest term rates are sometimes similar and sometimes different than that which affects longer term rates.  Yesterday was a modest wake up call for those expecting overly-aggressive Fed rate cuts, so shorter-term rates suffered relative to longer term rates.  The shorter the duration, the greater the suffering (i.e. Fed Funds Futures are the shortest-term indication).  

Bottom line: the market may not see rate cuts being as certain as they did 2 days ago, but 10yr yields are operating on a slightly different agenda.  Economic data heavily informs that agenda.  We'll see how much at 10am and especially after tomorrow's NFP.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
100-30 : +0-02
10 YR
2.0060 : -0.0150
Pricing as of 8/1/19 9:24AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Thursday, Aug 01
8:30 Continued jobless claims (ml) w/e 1.678 1.676
8:30 Jobless Claims (k) w/e 214 206
10:00 ISM Manufacturing PMI * Jul 52.0 51.7