The absence of overt, discrete motivation is one of the most interesting facets of the bond rally over the past few weeks. If anything, the overt/discrete stuff has made stronger cases for bond market weakness (i.e. high inflation reports and weak auctions). This speaks to a bigger picture shift in market psychology and has given way to more technically-motivated trading. Today also saw a good amount of influence from the corporate bond issuance process (and a surprising absence of influence from Fed Chair Powell's 2nd day of testimony). Net/net, yields closed down 5bps, right in line with the next technical level on our list (1.30%). We're not eager to bet against a bond market that's been so willing to rally, but nonetheless feeling cautious about any summertime Friday on a rally week.
-
Fed MBS Buying 10am, 1130am, 1pm
-
Jobless Claims 360k vs 360k f'cast, 386k prev
-
Philly Fed Index 21.9 vs 28.0 f'cast, 30.7 prev
slightly stronger overnight with some pull-back after hawkish BOE comments. Bonds still green though, 10yr down 1.8bps at 1.33% and UMBS 2.0 up 1 tick at 101-13 (101.41).
Losing some ground as Powell's testimony begins. This may be more to do with correlation than causality. There were a few big trades before Powell that set more defensive tone. 10yr yields are still barely positive on the day and 2.0 UMBS are back to 'unchanged.' at 101-12 (101.375).
Nice rebound after earlier weakness. MBS and Treasuries now at best levels of the day. 2.0 UMBS up almost a quarter point and 10yr yields down 4.2bps to 1.306.
MBS Market Alerts
