After Wednesday's respectable rally, we may as well give up the search for too much discrete causality in the bond market.  While we can definitely observe connections in the short term to individual events, technicals and tradeflows have been just as relevant and they tend to play out less predictably in terms of timing and ground-covered. 

10yr yields successfully defended against a break above a ceiling at 1.424 and moved fairly quickly back to the next technical zone underfoot.  This could be seen as anything from 1.34 to 1.38, but we've been using 1.36 in our "key levels" list.  

20210715 open4.png

As of this morning, bonds were also able to make a case for new breakouts--both of the short-term uptrend (yellow lines) and of 1.36.  In so doing, they've moved to test the pivot point at 1.30, but don't seem too keen on breaking it so far.  Here's a closer look:

20210715 open.png

For now, we're seeing this as another step in a consolidative process as opposed to evidence of new rally momentum.  Sideways, consolidative trends make good sense between now and whenever the Fed feels it has enough information to make a tapering decision.  We may get a few more tidbits to inform that outlook in Powell's 2nd round of congressional testimony today.

20210715 open3.png


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 2.0
101-12 : +0-01
Treasuries
10 YR
1.3420 : -0.0140
Pricing as of 7/15/21 10:34AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Thursday, Jul 15
8:30 Import prices mm (%) Jun 1.2 1.1
8:30 Philly Fed Business Index * Jul 28.0 30.7
8:30 Export prices mm (%) Jun 1.2 2.2
8:30 NY Fed Manufacturing Jul 18.00 17.40
8:30 Jobless Claims (k) w/e 360 373
8:30 Continued Claims (ml) w/e 3.313 3.339
9:15 Industrial Production (%) Jun 0.6 0.8