Crazy, Scary Morning Gives Way to Moderate Gains

The bond market gamed the Fed today, and won (i.e. the long end sold until the short end priced in lower rate hike odds). OK, perhaps it's not quite that simple, but it's not too much more complicated. The only potentially complicating factor would be the unknown extent of Japan's participation.  We know the Bank of Japan (BOJ) bought Yen aggressively enough that it could not have been done without selling USD-denominated assets, such as the massive stockpile of Treasuries it owns, but there's uncertainty as to how much of that could have been drawn from the Fed's RRP facility.  

Market Movement Recap
09:18 AM

Sharply weaker overnight and early this morning as bonds "break" in the long end (read more). 10yr up 5.4bps at 4.284 and MBS down about a quarter of a point. 

10:05 AM

The crazy act is working and MBS just turned green, up 2 ticks (.06) now.  10yr yields are up only 1.4 bps on the day at 4.246.  

12:34 PM

Plenty of volatility still, but MBS now up a quarter point and 10yr yields down almost 1bp at 4.225.

02:28 PM

Fading a bit from the highs with MBS down .19 from the mid-day price plateau.  10yr yields are down 1.2bps on the day at 4.221. 

04:40 PM

Back near the best levels for MBS with only a few minutes left.  Up 10 ticks (.31).  10yr yields are flat near their lows, down 1.2bps at 4.221. 

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