What's Up With Today's Massive Sell-Off In Bonds?
Bonds tanked hard today. Losses were in place right from the outset and things only got worse as the day progressed. The leading explanation focused on a more hopeful outlook for diplomacy in the coming days (and despite ongoing death and destruction). Declines in oil prices bolster that case, but the stock sell-off makes a counterargument. Today's video discusses the validity of this "de-escalation" trade as well as other potential market movers. Regardless of motivations, it was a nasty day with both MBS and Treasuries hitting their weakest levels since early 2019.
Fed MBS Buying 10am, 11:30am, 1pm
Sharply weaker overnight and no relief in early trading. Lots of focus on hopeful peace talks. 10yr up 8.5bps at 2.082. MBS down more than half a point.
Selling trend continues in linear fashion. 10yr now up 10.6bps at 2.103. 3.0 UMBS down 5/8ths of a point.
Steady weakness continues in Treasuries with 10yr up 12.2bps at 2.121%. MBS are down between 5/8ths and 3/4ths point depending on the coupon.
Another hour, another leg down for bond prices. MBS off nearly a point in the now defunct 3.0 coupons. 3.5s are down almost 3/4s. 10yr yield is up 14bps at 2.136%.