No Whammies From Powell. Bonds Like It
Today's only notable calendar item was the congressional testimony from Fed Chair Powell. He mainly stuck to the script, but elaborated a bit on a few topics (more details here). For example, he was very clear about the Fed's high hopes for upcoming labor market data. That means next week's jobs report would be hard-pressed to make the Fed interested in tapering any sooner. Thus, the strong outlook is actually a feather in the bond market's cap.
Fed MBS Buying 10am, 1130am, 1pm
Existing Home Sales 5.8m vs 5.72m f'cast, 5.85m prev
Flat in Asia, stronger in Europe, then weaker heading into domestic hours. Traders a bit cautious as auction cycle begins and ahead of Powell's afternoon speech. Currently roughly unchanged after being more than 3bps lower (10yr yield) overnight.
Bonds found buyers just after the 9:30am NYSE open and gains accelerated as Fed's Williams offered some dovish comments at 10:30am. 10yr yields now down 2.5bps and UMBS 2.0 coupons are up nearly a quarter of a point.
No whammies from Powell and a fairly bond-friendly approach (i.e. by putting months-long time frame on taper decision) are adding up to gains. MBS up more than a quarter of a point and the 10yr is now down more than 3 bps.