Russia fully invaded Ukraine overnight and bonds surged in response. Stocks fell. Oil prices surged. Then at 5:30am, oil prices and bonds reversed course. With the exception of a brief lull from 1130am to 1:15pm, markets maintained that "risk-on" trajectory all day. Oil prices were an exception as they surged during the bond rally and then fell as bonds sold off (normally opposite). MBS outperformed significantly in the afternoon, largely because Treasuries underperformed. Reasons for the crazy round trip are discussed in today's video.
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Fed MBS Buying 10am, 11:30am, 1pm
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Jobless Claims 232k vs 235k f'cast
GDP (Q4, prelim) 7.0 vs 7.0 f'cast
New Home Sales 801k vs 806k f'cast
Sharp rally overnight on Ukraine invasion news. Bouncing back a bit now, but 10yr still down 8.3bps at 1.916. MBS underperforming, still up 7 ticks (.22), but at the lows of the day (down more than a quarter point from the highs).
Corrective bounce accelerated in the final AM hours and is now leveling off ahead of the 7yr auction and Biden's 1:30pm statement. 10yr down 7bps at 1.93 and MBS up a quarter point.
Bonds continue correcting after Biden press conference. 10yr now down only 2.6bps on the day. MBS outperforming intraday, still up almost a quarter point, but at risk of slipping.
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