Still Waiting on Fed Above All Else
Bonds enjoyed another day of modest improvement on Thursday. On the plus side, gains are good. On the other hand, the pattern looks eerily similar to last week's (i.e. a few days of consolidation before more weakness). It's good to remember that recent weakness is primarily driven by the market adjusting to a shift in the Fed policy outlook. As such, it's hard to make a case for a significant friendly bounce before next Wednesday's Fed announcement.
Fed MBS Buying 10am, 11:30am, 1pm
Jobless Claims ............ 286k vs 220k f'cast, 231k prev
Philly Fed Index........... 23.2 vs 20.0 f'cast, 15.4 prev
Existing Home Sales..... 6.18m vs 6.44m f'cast, 6.48m prev
Moderately stronger overnight with most of the gains during European hours. Little changed in the first hour with 10yr down 2.5bps at 1.829 and MBS up just over a quarter of a point.
Sideways to slightly weaker as the trading session continues, but still in positive territory. MBS up 5 ticks (.16) and 10yr yield down 1.8 bps at 1.838.
Slightly weaker after 10yr TIPS auction, but recovering now. Trading levels right in line with the last update.