Intraday Volatility But Mostly For Treasuries; Fed On Deck
Bonds began the day trading right in line with yesterday afternoon's higher yields (or lower prices). The first two hours saw a decent rally with trading levels nearly returning to yesterday's stronger range. A bounce in stocks just after 10am made things a bit tougher for bonds. Granted, stocks aren't the only game in town when it comes to inspiring the bond market, but bonds are content to take cues for range-bound volatility while they wait for Wednesday's Fed announcement. Treasuries experienced most of that volatility while 3.0 UMBS were especially calm and sideways from 10am on.
Fed MBS Buying 10am, 11:30am, 1pm
FHFA Home Prices Nov y/y.............. 17.5 vs 17.4 prev
Case Shiller Home Prices Nov y/y..... 18.8 vs 18.5 prev
Initially weaker in the overnight session with 10yr yields as high as 1.797. Better buying into the domestic session, now back down to 1.75%. MBS are 3 ticks higher (0.09) to start.
Gains into the 10am hour, then a bounce with stocks just after 10am. 10yr still down 1.4bps, but back up to 1.762%. MBS up only 2 ticks (0.06) on the day now.
Gains resuming after strong 5yr Treasury auction. 3.0 UMBS up 6 ticks (.19) at 100-02 (100.06). 10yr less responsive, but still slightly stronger, down 2.5bps on the day at 1.751.