Last week saw yields break higher after being squeezed by a consolidation pattern inside a wider sideways range. That type of breakout implied a test of the prevailing range ceiling (.72). After a head-fake and recovery last Thursday, the new week begins with yields definitively breaking the .72 ceiling. There are several places to lay blame, but at this point the weaker momentum is its own justification for existence.
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20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
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ISM Non-Manufacturing 57.8 vs 56.3 f'cast, 56.9 prev
8:20 CME open saw sellers lined up to sell to start the week. Some cite preparations for the week's Treasury supply. Others point to stronger stocks and/or Trump's covid progress. 10yr up 2.32bps at .727 and 2.0 UMBS down 2 ticks (0.06) at 103-13 (103.41).
Things have deteriorated fairly quickly with selling pressure constant since 8:20am. 10yr yields now up almost 5bps to .75% and 2.0 UMBS down 6 ticks (.19) to 103-09 (103.28).
Yields are making a case for a new ceiling at .762% and have been trading under that level for more than an hour now. Cooperation from a sideways stock market isn't hurting. MBS have clawed back half of their losses on the day, now down an eighth of a point after being down as much as a quarter.
10yr yields at new highs for the day now, up 6bps at .765. MBS have given up most of the gains they'd recovered heading into the afternoon. The move lines up with a push to the highest stock prices of the day with S&P futures up 1.73% versus 5pm Friday.
MBS Market Alerts
