Impressive Move to Longer-Term Lows. What's Next?
The centerpiece of today's global trading session was an impressive overnight rally that took 10yr yields as low as 1.25%. That was strong enough to merit a corrective bounce between 7am and 9:30am, but yields topped out just over 1.30%, not once, but multiple times. The result is a classic pivot/inflection point on the 2-day chart--one we can continue to watch for evidence that bullish aspirations are shifting. As far as today was concerned, the repeated bounces at 1.30% added validity to the rally, at the very least.
Fed MBS Buying 10am, 1130am, 1pm
Jobless Claims 373k vs 350k f'cast, 371k prev
Bond rally extends overnight, once again driven by the European session. 10yr yields were as low as 1.25% before bouncing up to 1.28% currently (still down 4+ bps). MBS are up more than an eighth of a point with 2.0 coupons at 101-23 (101.72).
Sellers pushing back on the gains. 10yr up 3bps from AM lows, now down only 2bps on the day at 1.30%. MBS holding steadier, still up an eighth at 101-22 (101.69).
Buyers pushing back on sellers! Now back down to low yields of domestic session and MBS up to highs of day (2.0 coupon up more than a quarter of a point). Gains started shortly after the last update.
Best levels of the day for MBS with 2.0 coupons up 10 ticks (.31) at 101-28 (101.875). 10yr yield down 3.5bps on the day at 1.288 (supportive ceiling bounce at 1.30-ish, right in line with yesterday's lows).