Wednesday's Fed announcement is the biggest market mover remaining in 2020 for the average bond trader. The Fed is not going to change rates or the amount of bonds it buys, but there's at least some chance it will tweak the proportion of long-term vs short-term bonds. Whether it does or doesn't, bonds are planning to react. Today helped define the pre-Fed range--negatively at first, thanks to upbeat Brexit headlines. As the day progressed, stocks and bond yields dropped in response to news that NYC is at risk of a full shutdown.
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20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
Weaker overnight. Vaccine approval set the tone early. Strong biz sentiment data in Japan added pressure and a Brexit deadline extension iced the cake. Stocks are up 0.7% and 10yr yields are down 3+ bps at .92+. UMBS are off 5 ticks (.16) in 1.5 coupons. No major data on tap this AM.
Bond yields topped out right at the start of the domestic session and have been grinding back in a friendlier direction since then. MBS are outperforming--now back to 'unchanged' on the day while 10yr yields are still up 2.36bps at .92%.
Sharper gains followed news of a potential full lockdown in NYC (more here). With help from weaker stocks, bonds are holding those gains. 10yr yields are at the day's lows, down just a hair at .89%. UMBS 1.5 coupons are up 3 ticks (0.09) at 102.
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