Breaking Down the Big Move in Rates and Considering The Road Ahead

The 2nd and 3rd largest bank failures in history have happened over the past 3 days.  Markets reacted in a logical direction.  If anything, the drop in rates was made bigger by the fact that the market is searching for evidence that it's time for the Fed to dial back its hawkish rate policies. That's what today ended up being mostly about: the market betting on a MUCH lower rate hike profile in the coming months (and rate CUTS starting in a few short months).  Between Tuesday's CPI data and next week's Fed announcement we'll have the data we need and the requisite amount of cooling-off time to have a much better sense of what the road ahead looks like.  Today's video discusses several of the options, and much more.

Econ Data / Events
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Market Movement Recap
08:59 AM

Supermassive bond rally overnight, led by short-term rates.  2yr down more than 50bps at times.  10yr currently down 25bps at 3.45.  MBS up just over 3/4ths of a point.

12:36 PM

Strongest levels of the day at 11am and selling off a bit since then.  5.5 coupons still up 3/4ths on the day, but down half a point from highs.  10yr yield up 11bps from lows and now near highs of day at 3.524, but still down 18bps overall. 

04:07 PM

MBS now up "only" 22 ticks (.69) and 10yr down "only" 16bps at 3.545.  Both are quite a bit weaker on the day, but the pace of losses has been gradual

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