This week began with a decisive breakout to higher yields in the bond market. Trump's comments on stimulus have been a key source of volatility although the Treasury auction process proved to be a relevant consideration mid-week. Bonds managed to hold under the important 0.79% ceiling despite additional upbeat Trump comments on stimulus and a lackluster 30yr bond auction. That's a good sign, but it could also simply reflect traders closing short positions ahead of a 3 day weekend. Bottom line: it's not too soon to HOPE for support in the bond market, but perhaps a bit too soon to count on it.
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20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
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Jobless Claims 840k vs 820k f'cast, 849k prev
Bonds continued to build on the technical support seen at .79% in the overnight session, ultimately making it as low as .765% in 10yr yields. We're about a bp higher at 8:30am, but not trending higher at the moment. MBS are perfectly unchanged.
30yr auction was a bit soft and bonds weakened slightly in response. 10yr yields still down just over 1bp at .772 and 2.0 UMBS are down 2 ticks (0.06) at 103-08 (103.25).
MBS briefly hit their lows of the day just after 2pm--the same time of day as yesterday's acceleration in weakness. Could be there are a few traders making adjustments to MBS holdings or originators dumping supply after the prepayment speed report 2 days ago. Small potatoes in the big picture though. Treasuries remain just over 1bp lower on the day (in yield). 2.0 UMBS are an eighth lower (in price).
MBS Market Alerts
