There was a sharp sell-off in the bond market on Friday afternoon--at least relative to the day's relatively calm trading patterns--as the Fed once again announced an updated bond buying schedule for the following week.  It was a repeat of a similar performance seen at the end of last week when the Fed cut Treasury purchase limits from $50 bln per day to $30 bln.  The Fed's mortgage purchases walked a similar path, falling to $15.5bln / day this week from $25bln / day for most of last week (and $40bln the week before that).

Today's cut to Treasury purchases was notable because it was the first time the amount fell by at least 50%.  Specifically, the Fed will now cap buying at $15 bln per day in Treasuries versus this week's $30bln daily total.  MBS purchase limits were pared to a range of $8.9-10.6 bln per day--a far cry from the $50bln/day seen 3 weeks ago.

It's not that bond markets weren't expecting the Fed to continue pruning its buying schedule.  Rather, the adjustment was a bit bigger than anticipated.  As such, the market reaction was fairly quick, but not excessive in the bigger picture.    10yr yields moved from .61% to just over .65% on the news and 2.5 UMBS coupons dropped less than a quarter point.

Here are links for the buying schedules:

MBS

Treasuries


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
UMBS 2.5
103-28 : -0-04
Treasuries
10 YR
0.6430 : +0.0320
Pricing as of 4/17/20 3:18PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:15PM  :  ALERT ISSUED: More Reprice Risk as Fed Cuts Buying Amounts
2:05PM  :  ALERT ISSUED: Negative Reprice Risk Increasing as Familiar Pattern Plays Out
10:29AM  :  Fed Speakers, Data, Technicals, All Helping