MBS Live Recap: A Few Strategy Considerations Ahead of The Fed

The AM commentary revisited and reiterated the consolidation range that's been intact for more than a month.  As far back as 2.5 weeks ago (after the last jobs report) it became increasingly clear that the bond market stood its greatest chance of breaking out of the consolidation range after the September 22nd Fed announcement.  The direction, magnitude, and sustainability of that breakout remains to be seen, but after today's trading range fell completely inside yesterday's (hence the "inside day"), a post-Fed breakout is increasingly likely.

Econ Data / Events
  • Fed MBS Buying 10am, 1130am, 1pm

  • Housing Starts 1.615 vs 1.555m f'cast, 1.554m prev
    Building Permits 1.728m vs 1.600m f'cast, 1.630m prev

Market Movement Recap
08:33 AM

Bonds were moderately weaker overnight with losses peaking with stock gains shortly after the EU open.  Steady buying since 4am and getting back near 'unchanged' now.  No reaction to econ data.

12:02 PM

Bonds selling off into EU close.  Volume and activity picking up.  10yr now up 1.4bps to 1.326%.  MBS down 2 ticks (-0.06).  

01:50 PM

Bonds rallied modestly after the last update, but have been slowly, steadily weakening in the past hour.  Same levels as the previous update.  

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