No Major Reaction to Fed Minutes

Today's only event that has any precedent of inspiring rate volatility was the release of the minutes from the Fed meeting that took place 3 weeks ago.  The fact that 10yr Treasury yields held roughly inside a 1bp trading range after the release tells us everything we need to know.  It was every bit as uneventful as we expected.  Even so, was there anything to learn?  Not really...  The Minutes were wholly unsurprising to anyone who's seen most of the recent Fed newswires.  Bonds were slightly weaker in the overnight session due to UK inflation coming in hot, but mostly in the shorter end of the curve.  That meant modest underperformance for MBS (mortgages' average life span is still seen as being quite a bit lower than 10 years, so they take cues from shorter-term bonds as well).

Market Movement Recap
11:23 AM

Moderately weaker overnight, led by UK inflation.  Mostly back to unchanged now with MBS down 2 ticks (.06) and 10yr up half a bp at 4.422

01:57 PM

Off the strongest levels ahead of Fed Minutes.  MBS down an eighth.  10yr unchanged at 4.417

03:10 PM

Minimal reaction to Fed minutes.  MBS down 5 ticks (.16) and 10yr up 0.9 bps at 4.427.

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