Another Green Day, But Can We Trust It?
Bonds were briefly weaker mid-morning, but rallied back to close at slightly stronger levels. We've been defensive about the upward trend in rates for more than a month now and generally on the lookout for enough of a rally to let our guard down a bit. With the past 3 business days seeing anywhere from modest to moderate improvements, is it time to conclude we've seen the worst of the recent drama? In a word: no. Bonds have a lot more ground to cover before we'd think about that as something more than just another possibility. Even then, we're expecting a fair amount of volatility surrounding next week's Fed announcement.
Fed MBS Buying 10am, 1130am, 1pm
Case Shiller Home Prices m/m 1.2%
FHFA Home Prices m/m 1.0%
Consumer Confidence 113.8 vs 108.3 f'cast
New Home Sales 800k vs 760k f'cast, 702k prev
flat to slightly weaker in Asia, then stronger in Europe. Roughly unchanged in the first 30 minutes domestically. 10yr at 1.632 and 2.5 UMBS at 102-13 (102.41).
Mid day weakness heading into the 10am hour followed by a rebound over the past few hours. Still a narrow trading range on the day. 10yr down 1.5bps at 1.618. MBS up 1 tick (0.03).