Another Shot at Consolidation. Is This Time Different?
Last Friday had a fairly classic "leveling-off" vibe to it with respect to interest rates. It was the only day of the week that 10yr yields made positive progress during domestic hours and it was by far the smallest upward movement of the week in terms of close-to-close yields. Additionally, it fell at the end of a trend of smaller upward moves throughout the week. Despite the positive cues, rates surged higher on Monday. Now here we are again with even better cues about consolidation, not to mention the fact that the higher rates go, the better the odds become for some form of recovery. Today's video discusses whether things might be any different this time and what sort of milestones we might look for in assessing that possibility (if we wait until next week to do so!).
Fed MBS Buying 10am, 11:30am, 1pm
Existing Home Sales 6.02m v 6.10m f'cast, 6.49m prev
Bonds build modestly on the notion of technical support with help from a triple top in EU bonds over the past 3 days. 10yr yield down .9bps at 2.158. MBS are flat in 3.5 coupons. Stocks down .6%
Steady gains in MBS in the AM hours, leveling off now with 3.5 coupons up 6 ticks (.19). 10yr yield down 1.6bps and looking reluctant to break below 2.135 (roughly 2bps above that now).
MBS off the highs now with 3.5 coupons up only 2 ticks (.06) on the day. Underperforming 10yr due to yield curve issues (e.g. 5yr yields UP 1.2bps while 10yr is DOWN 1.4bps).
Calm, sideways conclusion to the afternoon with MBS finding footing roughly an eighth of a point higher on the day. 10yr is down 2.3 bps and volatility has been progressively dying down.