Big Victory After Powell Says Toss Up Between 50 and 75 Next Meeting
Whether we're talking about the past week, month or year, the war continues going poorly for mortgage rates, but today's battle went quite well after Powell's cavalry rode to the rescue. In reality, it was one simple line, when he said the next meeting would involve a discussion between 50 and 75bp rate hikes, that caused the bond market to turn on a dime.
Fed MBS Buying 10am, 11:30am, 1pm
Retail Sales -0.3 vs +0.2 f'cast, +0.7 prev
Import prices 0.6 vs 1.1 f'cast, 0.4 prev
Export Prices 2.8 vs 1.3 f'cast, 0.8 prev
Strong overnight gains, partly due to selling exhaustion as traders are now positioned for the Fed, but with the biggest move coinciding with a surprise ECB meeting announcement. AM data in the US isn't hurting. 10yr down 12bps at 3.36. MBS up roughly 5/8ths.
Modest give-back in the 10am hour. MBS are a quarter point off the highs, but still up 3/8ths on the day. 10yr is more than 6bps up from the lows, but still down more than 6bps on the day at 3.414.
First move after Fed was slightly weaker. Rallying back a bit now that Powell said 75bps won't be common. MBS up half a point on day. 10yr down 9bps at 3.38. Near best levels.
Additional gains as Powell press conference continues. MBS up over a point and 10yr down 15bps to 3.328.
Short squeeze in bonds. MBS up 1.14 points and 10yr down 19.3bps to 3.286