Has Everything Changed After Powell Speech?
Powell's speech was the only Fed communication on the calendar today, but they surprised markets by dropping a policy change on their website. Suddenly, the journalistic coverage of today's Powell speech no longer seems insanely presumptuous. But did the Fed really say anything new? And if not, why are markets reacting like they are? We'll discuss this in today's video.
20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
Jobless Claims 1.006m vs 1.0m f'cast
Q2 GDP (1st revision) -31.7 vs -32.5 f'cast
Moderately stronger to start after quiet overnight trading. Treasuries were unchanged until 3am, then rallied modestly with European bonds. Stocks are effectively unchanged and MBS are opening 3 ticks (0.09) higher.
Both stocks and bonds improved moderately but quickly as the Fed surprised the market with an actual policy document on its website (more on that HERE). 10yr yields were down more than 3bps for a moment, but have bounced 1bp up to .667. 2.0 UMBS rallied and bounced as well--currently right in line with pre-Powell highs. Even as this is typed, a potential knee-jerk bounce is taking shape. More to follow if that continues...
Knee-jerk confirmed. MBS down nearly a quarter point from the post-Powell highs. 10yr yields up 2.5bps on the day.
7yr auction was decent--not decent enough to change bond market momentum all by itself, but yields are off their highs by just over 1bp. MBS are down only an eighth of a point on the day.