MBS Live Recap: What do we Make of Today's Bond Bounce?

After a big sell-off in response to yesterday's Fed announcement, bonds rallied back today.  The gains were slow and steady at first, but the pace quickened at 9:30am (a popular time of day for increased momentum in bonds, even though it's the NYSE open).  Data was overlooked and 10yr yields ultimately made it down to the 1.80% technical level (adjusted to 1.795 today to better fit the intraday bounces), but were unable to sustain a breakout.  As such, we are left with the possibility that today was another day in the ongoing rising-rate consolidation process (one that just happened to be green) even though the rate bulls are hoping it helps build a case for support at recent ceilings.  

Econ Data / Events
  • Fed MBS Buying 10am, 11:30am, 1pm

  • Durable Goods......... -0.9 vs -0.5 f'cast, 3.2 prev
    GDP, Q4, advance..... 6.9 vs 5.5 f'cast, 2.3 prev
    Jobless Claims ..........260k vs 260k f'cast, 290k prev

Market Movement Recap
08:47 AM

Surprisingly stable considering yesterday's events and moderately stronger by the domestic open.  10yr down 4bps at 1.832 and 3.0 UMBS up an eighth of a point.

11:19 AM

Additional gains into the 10am hour, but backing away from a technical breakthrough now.  10yr bounced at 1.795, now "only" down 6.6 bps at 1.807.  MBS up just over a quarter point. 

01:03 PM

Respectable 7yr auction stats despite intraday bond rally.  No major reaction though.  10yr down 8bps at 1.792 and MBS up 10 ticks (.31).

03:08 PM

yields retreated back above the 1.80% pivot point by the 3pm CME close (currently 1.814%).  MBS are a quarter point higher on the day, but also off their best levels.

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