Sideways and Still Waiting on Friday's Jobs Report
Today's trading lived up to the sideways promises discussed this morning. And yes, while it is terribly cliche, "sideways ahead of the jobs report" is indeed actually the best way to view the week's trading so far. 10yr yields were less than 1bp lower by the 3pm CME close and 2.5 UMBS coupons were perfectly unchanged. On a slightly bullish note, 10yr yields found support at 1.62%, but we should have no doubts about the fragility of that ceiling in the event of a super strong payrolls print on Friday.
Fed MBS Buying 10am, 1130am, 1pm
Bonds recover slightly in low overnight volume and light volatility. 1.62% technical level offered a supportive ceiling and 10yr yields are starting half a bp lower at 1.601. 2.5 UMBS are up 1 tick at 103-19 (103.59)
Modest additional gains for Treasuries with 10yr now down 2bps at 1.587%. MBS have lost a bit of ground, however, now back to unchanged on the day at 103-18 (103.56).
MBS remain unchanged and 10yr yields are closer to unchanged than they were a few hours ago (down just over 1bp at 1.594). Despite several corporate bond pricings, the Fed's beige book, and a few Fed speakers, we've seen no strong correlation between events and market movement.