Decent Day For Bonds as Stocks Sell
A good, old-fashioned "risk-off" rally has been hard to come by in 2021, but that's arguably what we saw today. Whether investors were shedding stocks due to broad economic/pandemic risks, corporate earnings, or some other reason, the net effect seems to have been for some of that cash to find its way into the bond market. Like the rally last Thursday, today's gains were driven, at least in part, by short-covering. As such, we shouldn't jump to conclusions about a sustained rally just yet.
Fed MBS Buying 10am, 1130am, 1pm
Weaker at first then stronger in the overnight session. Net effect: roughly unchanged to start with 10yr yields at 1.603% and 2.5 coupons up 1 tick (+0.03).
The 9:30am NYSE open was good for bonds (as it sometimes is). 10yr yields are challenging the 1.585% technical level, currently down 2.8bps at 1.582%. UMBS 2.5 coupons are up an eighth of a point at 103.5.
Back to "sideways and quiet," but this time, holding more than 4bps of improvement in 10yr yields (1.568). Similar tack for UMBS 2.5 coupons, up 5 ticks at 103-17 (103.53) and sideways near those levels for several hours.