Relatively Sharp Losses, but Nothing Special in The Bigger Picture

Bonds began the day modestly stronger, and that was their first mistake.  Starting around 10am, the gains began evaporating following comments from Fed's Kashkari (who needs to see "many" more months of good inflation before considering a cut) and a big pop in consumer confidence data.  In the next 3 hours, both the 2yr and 5yr Treasury auction would add to the pressure.  MBS were only down a quarter point on the day, which is an unremarkable move for the first day back after a 3 day weekend, but in contrast to the low volatility gains in the first 2 hours of the day, it feels subjectively abrupt.  Mortgage lenders concur, based on the number of reprices (and 2nd reprices).

Econ Data / Events
    • FHFA Home Prices 
      • 0.1 vs 0.5 f'cast, 1.2 prev
    • Case Shiller Home Prices
      • 1.6 vs 0.9 prev
    • Consumer Confidence
      • 102.0 vs 95.9 f'cast, 97.0 prev
Market Movement Recap
09:55 AM

Sideways in a narrow range overnight.  10yr unchanged at 4.466.  MBS up 3 ticks (.09).

10:23 AM

Slightly weaker after confidence data and Fed comments.  10yr up 2 bps at 4.486.  MBS up 1 tick (0.03), but down 3 ticks (0.09) from intraday highs.

11:37 AM

More losses after 2yr auction.  MBS down 2 ticks (.06) and 10yr up 3bps at 4.496

01:06 PM

10yr yields are now 5.6bps higher at 4.522 and MBS are down an eighth on the day

03:01 PM

Weakest levels of the day with MBS down 9 ticks (.28) and 10yr yields up 7.4bps at 4.54

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