Slightly Weaker Today, But Still In The Recent Range
Thursday proved to be a very forgettable session for the bond market with trading levels technically weaker on the day, but right in line with most of Wednesday's trading. MBS were actually a bit better than that with prices ultimately making it back to 'unchanged' levels even as 10yr yields remained 2-3bps higher. In the bigger picture, the new, lower rate range persists. Weaker GDP data and a weaker 7yr auction did nothing to challenge it.
Fed MBS Buying 10am, 1130am, 1pm
GDP 6.5 vs 8.5 f'cast, 6.3 prev
Jobless Claims 400k vs 380k f'cast, 424k prev
Pending Sales -1.9 vs +0.3 f'cast, +8.3 prev
flat to slightly weaker overnight. EU econ data added to weakness around 4am, but we're still in the recent range. 10yr up 2.3bps at 1.261%. MBS down less than an eighth.
Initial reaction to data was modestly stronger, but both MBS and Treasuries have now returned to pre-data levels (same as the last update).
Sideways to slightly stronger all day. Modest rally at 11am in Treasuries mainly (chalked up to month-end and corporate bond hedging flows). Then more weakness into (and out of) the 7yr auction. Net effect=MBS and TSYs still in the same range set in the first hour of trading.