Bonds were slightly cautious ahead of the Fed announcement today, with a few traders possibly wondering if recent economic/pandemic-related traction would bring a shift in tone. Indeed it did, but Powell was clear in separating a more upbeat tone from any implications for monetary policy. Bottom line: the Fed's punchbowl is still firmly bolted to the table. Bonds rallied back accordingly in the afternoon.
Fed MBS Buying 10am, 1130am, 1pm
MBA Refi Apps 3185 vs 3219 prev
Purchase Apps 281 vs 295 prev
Bonds opened flat in Asia and weakened slightly in Europe. German Bund yields spiked moderately to their highest levels since early March and a small amount of that negativity brushed off on Treasuries. 10yr is up 1.1bps to start the domestic session and 2.5 UMBS are down 1 tick (.03) at 103-14 (103.44).
Bonds under a bit of pressure since the 9:30am NYSE open (early gains reversed then). Slightly bigger bump after 1030am. Tempting to chalk it up to oil inventories, but oil prices aren't moving as much. 10yr yield up 1.5bps at 1.64 and 2.5 UMBS down 1 tick (0.03) on the day now.
Losing more ground ahead of the Fed. Slow burn though. 10yr up 2.3bps at 1.65%. UMBS 2.5 coupons down 3 ticks (0.09) on the day and just over an eighth of a point from the morning's highs.
More volatility than expected post-Fed. Early move was weaker, but bonds are turning green as Powell speaks (and reiterates commitment to accommodation).