For days--and especially since last Friday--we've been increasingly worried that the 2-month bond rally was running out of steam and at risk of a reversal. The jury was technically out until all of our overhead ceilings were taken out. As of today, they are.
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20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
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Core Producer Inflation (y/y) 0.3 vs 0.0 f'cast, 0.1 prev
Bonds much weaker overnight as yields finally break technical support at the .57/58 barrier. Quickly up to .62+. MBS starting out an eighth lower. Russian vaccine in the headlines, but it's a supporting actor at best.
Treasury yields at new highs (.646%) and MBS near the lows of the day, down 6 ticks (0.19) at 103-15 (103.47). Stocks are roughly were they were before last night's vaccine headlines (mildly stronger).
Cue the capitulation selling spree for MBS. They were willing to outperform until this afternoon, but are now getting caught up with Treasury weakness. 2.0 UMBS down almost half a point. 10yr yields up more than 7bps to .656%. Reprices galore.
Big volatility in both directions this afternoon, but stock weakness ultimately helping bonds claw back some of the day's losses. MBS now down "only" 9 ticks (.28) on the day and 10yr yields are back down to .628%. Good luck assigning blame. The huddle video goes into greater detail on that.
MBS Market Alerts
