This Is How They Get Ya!
Bonds weathered the storm of a Treasury auction and the Fed meeting minutes today without any significant drama. Trading levels started the day stronger and managed to hold onto the gains by the 3pm close. At first glance, one might be tempted to be reassured by this turn of events. And while it could indeed by the case that today was but the first in a series of friendlier days ahead for bonds, we'd want to see at least 3 similar days, back to back to back, before getting too excited.
Inconsequentially stronger early in the overnight session. 2-way volatility in Europe. 10yr down less than 1bp at 3.947 and MBS up an eighth.
Some additional strength mid-morning, but leveling off now. MBS up a quarter point. 10yr yields down 4bps at 3.914
Slightly stronger after respectable 5yr Treasury auction. 10yr yield down 6bps at 3.896. MBS up 3/8ths+
Losing some ground after Fed Minutes. 10yr down only 3bps at 3.923. MBS up only 6 ticks (.19).
Modest additional weakness. MBS up only 3 ticks on the day (.09) and 10yr yields down 2.3bps at 3.931.