Ending on an Equivocal Note Ahead of Fed Week
If we look through the small-scale volatility throughout the week, we see bond yields moving back up to last week's lows as of Wednesday and essentially remaining flat since then. In that sense, Monday was the big panic day for markets, Tuesday was transitional, and the rest have been equivocal. Next week's Fed announcement introduces bigger volatility risks. Beyond the Fed, daily covid case counts (and any other significant covid-related news) will continue to be scrutinized as traders attempt to gauge the impact of the delta variant and flatter vaccination rates.
Fed MBS Buying 10am, 1130am, 1pm
Markit Composite PMI 59.7 vs 63.7 previously
Services PMI 59.8 vs 64.8 f'cast, 64.6 prev
modestly weaker overnight in quiet trading. German Bunds retraced much of y'day's gains. 10yr up 2.1bps at 1.298%. MBS still finding liquidity, but down roughly an eighth of a point.
Markit PMI actually made a dent in the weakness after 9:45am, but the rally has run its course. 10s are still 1.6bps higher on the day at 2.0 UMBS are 2 ticks (0.06) lower.
Steadier and slightly stronger for most of the mid-day hours. MBS are still down 2 ticks (0.06), but had made it back to unchanged levels a few moments ago. 10yr yields have been very flat near 1.29%.