Jackson Hole Follow-Through or Something Else?
Last Friday's Jackson Hole speech was the subject of a fair amount of speculation and and anticipation in advance. Some thought it would be a total non-event. Others thought it could offer important clues about September. The truth was somewhere in between with Powell not offering any surprising new ideas, but with markets nonetheless finding a way to be surprised about it. Perhaps it was the complete lack of a conciliatory message? Either way, follow through from Friday's Jackson Hole reaction accounts for at least some of today's weakness. Beyond that, data will need to provide a motivation for yields to fall in a meaningful way.
- no major economic reports
Sharply weaker overnight with 10s testing the recent ceiling at 3.13%. Some traction since then (still up 6bps at 3.09%). MBS down more than 3/8ths of a point. No overt, discrete motivations. Just a general dogpile on Friday's trading with bonds finally feeling the effects that Friday's stock sell-off helped them avoid.
Ceilings held up fairly well despite some early weakness. MBS are outperforming now along with the short end of the yield curve. 4.5 coupons are down just under a quarter point after being down more than 3/8ths of a point earlier.
little-changed in MBS or Treasuries since the last update. MBS still outperforming, down just over a quarter point on the day. 10yr yields up 8.8bps at 3.117.