Would Rates Be Going Higher Without Ukraine Situation?
Rates were rising abruptly as of last Thursday when the first major geopolitical jolt hit the market. After that, stocks and bond yields moved lower. Volatility increased. yields even returned to Thursday's highs 3 more times, but never broke them. The longer markets avoid revisiting Thursday's levels, the more we can consider that the current zone might have offered some sort of organic support, with or without Ukraine. Moreover, with the Ukraine situation not likely to be magically resolved by Tuesday, the case for short-term optimism is at least able to be argued for the first time in 2022. (Note: "able to be argued" is not the same as the case being strong, but at least it's something).
Fed MBS Buying 10am, 11:30am, 1pm
Existing Home Sales 6.5 vs 6.1 f'cast, 6.09 prev
Leading Economic Indicators -0.3 vs +0.2 f'cast, 0.8 prev
Initially weaker overnight, but slow and steady recovery heading into domestic hours. Early domestic trading bringing in better buying on a combination of 3-day weekend bet hedging and several Putin/Ukraine headlines.
Slow, steady gains continue. MBS at highs of the day, up an eighth of a point at 100-17 (100.53). 10yr yields down 4.5bps at 1.923.
Modest weakness threatened to materialize heading into the 3pm close, but bonds are back at the best levels of the day. 10yr yield is down 5.2 bps at 1.916 and 3.0 UMBS are up an eighth of a point.