In late July, bonds rode a wave of momentum toward lower yields with many traders targeting the 1.25% zone in 10yr Treasuries. That floor was broken on Monday July 19th.  The rally extended to 1.128% before bouncing moderately.  Another attempt was made in the week before last, but 1.128% held firm again.  Heading into last week's bond market supply, yields spiked, but bounced firmly at the 1.37/1.38% technical level. 

These juxtaposed bounces make decent sense.  After 4 months of rallying and a break of the 1.25% target, it was no surprise to see rally momentum stall out.  It was just as logical to see sellers shy away from a more aggressive move higher given the recently lackluster econ data, increasing covid concerns, and the passing of a heavy dose of supply. 

20210819 open2.png

We're now in a period of indecision, waiting for clarity from Powell next week and covid in general. The center of the range is 1.25% until further notice (incidentally, the mid-point of the recent ceiling/floor bounces).  Bonds aren't looking eager to stray too far from that mid-point so far today.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
UMBS 2.0
101-13 : +0-03
10 YR
1.2450 : -0.0280
Pricing as of 8/19/21 11:23AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Thursday, Aug 19
8:30 Philly Fed Business Index * Aug 23.0 21.9
8:30 Continued Claims (ml) w/e 2.800 2.866
8:30 Jobless Claims (k) w/e 363 375
10:00 Leading index chg mm (%) Jul 0.8 0.7