Very Tame Reaction to The Fed Despite Bond-Friendly Message
Bonds took a bit of a lead-off heading into today's Fed announcement as 10yr yields flirted with a break below 1.0% for the first time since cresting that level in early January. As expected and hoped, the Fed statement was a snoozer. If anything, it was bond-friendly and Powell's press conference even more so. Still, bonds barely budged. Stocks were much more volatile with S&P futures falling more than 3% by the end of the day. Last but not least, here's an obligatory Game Stop price update: 339.7 at the close, more than doubling yesterday's close.
Fed UMBS Schedule 10am, 1130am, 1pm
Durable Goods: 0.2 vs 0.9 (Core CapEx: 0.6 vs 0.6)
Bonds rallied moderately overnight with most of the gains seen during the European session. Early domestic traders piled into the same trade, especially after the weaker-than-expected Durable Goods data. Bonds have their sights set on a break below 1.0% in 10yr yields and are currently less than 1bp away. MBS are up an eighth of a point and stocks are down more than 1%.
MBS are back in line with AM levels after a late morning rally that took 1.5 coupons more than a quarter of a point higher on the day. 10yr yields were unable to crack below 1.0%, but remain within striking distance (1.014%). Stocks are still down big (1.5%).
Very quiet trading during and after Fed statement and Powell press conference. Powell was utterly supportive, but markets assumed he would be. Bonds moved a hair higher in yield, but are now back in line with pre-Fed levels (same as the last update, except stocks have continued to tank, now down 2.7%).