Bigger Picture Bounce or Just Another Pre-Weekend Pause
Bonds were moderately to sharply weaker overnight and deteriorated further in the afternoon. Given the strong move to 1.25% in 10yr yields the day before, you'd be well within your right to worry about a bigger picture bounce. That said, the bond market is also well within its right to sell off 6bps in Treasuries and 3/8ths of a point in MBS on the Friday before it has to buy $120 bln of bonds and digest a new CPI in the first 2 days of the following week. In other words, we may not get a great answer about big-picture bounces or pre-weekend pauses until next Wednesday.
Fed MBS Buying 10am, 1130am, 1pm
Weaker overnight in a fairly linear move that started right at the open and continued through European hours. 10yr is up 4bps at 1.336 and 2.0 UMBS are down almost a quarter point.
Fairly calm so far despite a bit of extra weakness in Treasuries (10yr holding right at the 1.35% technical level). MBS have been flat since 8:30am, never more than a tick (0.03) away from those levels (down 0.22).
Weakness accelerating as 10s break 1.35% ceiling (1.36% now). MBS down 10 ticks (.31) on the day and an eighth of a point from the AM plateau. No overt causes. Just Friday afternoon leakage.