Another Day in The New, Higher Rate Reality

"Higher for longer," they said.  And they weren't kidding.  After the mini banking crisis in March, rate watchers were hopeful that this visible consequence of the rate surge meant that a big corner had been turned in the big picture.  But in May and June, the Fed was increasingly unconcerned with bank risks while they continued reiterating the "higher for longer" messaging.  Markets were slow to take them at their word, but the surprisingly "not bad" economic data in July and August has worked to change some opinions.  There have been some complicating factors over the past 2 weeks, but rising rate momentum is still mostly about the economy. As such, it's the economy that will need to demonstrate a shift before we see meaningful relief.  Until then, the path of least resistance is the path we've been seeing.  Today was just another day on that path.

Market Movement Recap
09:34 AM

Weaker in Asia and Europe overnight.  Modest follow-through so far.  10yr up 6.3bps at 4.314.  MBS down 14 ticks (.44).

12:45 PM

More weakness into the noon hour, but stabilizing since then.  10yr up 8.7bps at 4.338.  MBS down 3/8ths.

03:11 PM

little-changed from the last update (perfectly unchanged, in fact), and very flat over the the past 2 hours.

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