Fed Speakers and Corporate Bonds Keep Negative Momentum Intact
Bonds came into the domestic session moderately weaker, following European markets (which, themselves, were incidentally following US markets from Thursday afternoon and yesterday). A majority of the selling in the morning hours followed the 8:20am CME open, suggesting traders showed up to sell regardless of data or events. Afternoon weakness was more readily attributable to corporate bond pricings (especially just after 3pm ET). Nonetheless, Fed speakers received a lot of attention, primarily due to Chicago Fed's Evans striking a hawkish tone on a day with higher bond yields and little else by way of obvious scapegoats for the move.
Fed MBS Buying 10am, 11:30am, 1pm
Housing Starts 1.793m vs 1.745m f'cast, 1.788m prev
Building Permits 1.873m vs 1.865m f'cast, 1.865m prev
Moderately weaker overnight with additional selling in early domestic trading. 10yr up 4.3bps to 2.899 and 4.0 UMBS down nearly 3/8ths of a point at 99-23 (99.72).
Nice little bounce as EU session winds down. 10yr now up "only" 4bps at 2.895. MBS down "only" 6 ticks (.19).
Mid-day gains evaporating as corporate deals begin to launch. 10s back up to 2.917% and MBS down 3/8ths again.
Another glut of selling pressure after the 3pm close. It lines up with a few big corporate bond "pricings" more than anything. 10s at 2.94% and MBS down nearly half a point at the 5pm close.