Last week was clearly a defensive shift for the bond market. Yields asymptotically approached 0.79% but managed to find support at that technical ceiling. As the new week gets underway, it looks like Traders may have just been waiting to buy at that supportive ceiling until after the 3-day weekend. Both Treasuries and MBS are noticeably stronger to start, but there's more ground to (re)cover if we want to get back in the previous range (sub 0.72% 10yr yield). MBS have broadly outperformed in recent months and are still technically in the sam trading range since early July.
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20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
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Consumer Price Index (Core, y/y) 1.7 vs 1.8 f'cast, 1.7 prev
Bonds were modestly stronger in the overnight session with credit going to the pause of a J&J vaccine trial after a participant developed unexplained side effects. There's also talk stimulus disagreements helping, but we're really not seeing either of those two market movers hitting stocks. That leaves us to assume some innate bond buying demand to start the new week (good stuff). 10yr yields down almost 4bps, trading under .74%. MBS up an eighth.
Stocks and bonds generally following each other during domestic hours with 10yr yields challenging the previous range boundary at .72-.73. UMBS 2.0 coupons have gained steadily throughout the day and are now up 6 ticks (.19) at 103-05 (103.16). The "risk-off" move is most easily attributed to scattered headlines downplaying fiscal stimulus.
MBS lost a disproportionate amount of ground this afternoon (read more about that in this alert), but look to have found their footing heading into the final hour of trade. 2.0 UMBS are still an eighth of a point higher on the day and 10yr yields are still flirting with their previous range ceiling (this time as a floor) at .72+.
MBS Market Alerts
