Is Today's Bounce Enough to Reinforce the Range?
After 5 straight trading days of weakness and 3 stubborn days failing to break below the most recent rate floor, bonds finally managed to put in a solid performance. To recap, that's one (1) good day versus 8 consecutive days that were less than good. All of the above fits the narrative of broader sideways range-finding but the big question is whether or not today's single day of gains is enough to suggest that bonds are at their near-term ceiling. To the optimists, we'd say that's not impossible. To the pessimists, it's not guaranteed, and to everyone in between, it probably depends on the upcoming data and events.
Fed MBS Buying 10am, 11:30am, 1pm
modestly higher to start overnight session, then slightly stronger during European hours. 10yr yield down almost 3bps, right in line with 3.01% technical level. MBS starting out an eighth of a point higher.
Additional gains at the 9:30am NYSE open with money hitting both sides of the market. 10yr down 6.6bps at 2.974 and MBS up 3/8ths at 99-20 (99.625).
Modest volatility after 3yr Treasury auction, but back near the best levels of the day. 10yr and MBS both at the same levels from the previous update.