MBS Live Recap: Crazy Day For Bonds. Is The Worst Over?

For 2 straight months, and especially over the past few weeks, we've been calling out the Georgia senate election as the biggest ticket market mover for bonds.  It proved its importance today as 10yr yields broke above 1.0% for the first time since March 2020.  Selling hit hard overnight, and a second wave hit at the 9:30am NYSE open as stock prices and bond yields moved higher in concert.  There was never a convincing push back in the other direction despite the drama unfolding in the capitol building.  All we have is a ceiling for today.  It remains to be seen if it will be a ceiling for more than a day.

Econ Data / Events
  • 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)

  • ADP Employment -123k vs +88k f'cast, +304k prev

  • Factory Orders 1.0 vs 0.7 f'cast, 1.3 prev

Market Movement Recap
08:29 AM

sharply weaker overnight following Georgia senate elections.  While the election is a surprise to some, the market reaction is as logical as can be.  10yr is up to 1.014 and UMBS 1.5 coupons are half a point lower vs y'day morning.

10:08 AM

The most recent losses are a result of the 9:30am NYSE open and asset-allocation trades following the GA senate election.  MBS down more than 3/8ths of a point and 10yr yields up 9bps to 1.046%.

02:09 PM

Congress is arguing about whether or not to overturn Biden's electoral victory.  Ossoff still leads the race for the 50th democratic senate seat.  Protestors have stormed the capitol building.  And the Fed just released meeting minutes.  Just another Wednesday afternoon.  No major, new weakness since the last update though.  

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