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.
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Fed MBS Buying 10am, 1130am, 1pm
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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.
MBS Market Alerts
