Weaker Today, But Stronger vs Last Week. Stocks in Control
Blaming stocks for movement in the bond market (and vice versa) is usually a cop out, but occasionally relevant. The latter is arguably the case this week as Monday saw a big drop in stocks to the lowest levels in over a year (depending on the index). It took bonds a while to catch on, but once they did, they spent most of the rest of the week moving the same direction. Today was no exception, but the fact that stocks were rising fairly quickly meant that bonds were under pressure as well. Today's losses aside, both MBS and Treasuries are heading out at much stronger levels compared to last Friday.
Fed MBS Buying 10am, 11:30am, 1pm
Import Prices 0.0 vs 0.6 f'cast. 2.9 prev
Export Prices 0.6 vs 0.7 f'cast. 4.1 prev
Consumer Sentiment ...59.1 vs 64.0 f'cast
Current Conditions ......63.6 vs 70.5
Current Conditions lowest since March 2009
inflation expectations unchanged
Modest selling at start of Asian trading hours, then flat. Modest selling at start of European hours, then flat. Net effect: 10yr up 5bps at 2.906. UMBS 4.0 down almost a quarter point, but liquidity is still lacking (i.e. losses might not be that bad by the time buyers and sellers resolve their game of Marco Polo.
Some weakness after the 9:30am NYSE open, but bouncing back to previous levels now. MBS down just over an eighth and 10yr yields up 5bps at 2.906.
Nice recovery into the noon hour, then back to weakest levels by 1pm. Now drifting with MBS down 6 ticks (.19) and 10yr up 6.5 bps at 2.92%
Sideways near weakest levels. Today was all about the bounce in stocks and a modest (in the bigger picture) give-back in bonds.