More Gains. Are Bonds Overbought?

The combination of friendly economic data, dovish comments from the Bank of Canada, and lower oil prices helped yields drift down to new 3-month lows this morning.  In less than a month and a half, that brings the size of the 10yr yield rally to nearly 90bps.  Is that too much, too soon?  The answer could depend on perspective.  It's a big move in and of itself, but one could argue that bonds were brutally oversold heading into mid October.  One reassuring piece of evidence is the extent to which yields have remained calm and sideways on each of the past two afternoons after rallying to new multi month lows. Either way, there's no debate about the data dependent nature of the movement.  With that in mind, Friday's jobs report remains critically important.

Econ Data / Events
    • ADP Employment
      • 103k vs 130k f'cast, 113k prev
      • ADP says more moderate hiring and wage growth in 2024
    • Q3 Labor Costs
      • -1.2 vs 0.9 f'cast, +3.2 prev
Market Movement Recap
08:32 AM

Modestly weaker overnight but turning green after AM data.  10yr down 0.4bps at 4.159.  MBS still down 2 ticks (.06) but probably not for long.

01:15 PM

Steady gains. Best levels of the day.  MBS up 5 ticks (.16) and 10yr down 5.2bps at 4.115.

03:42 PM

Off the best levels, but still stronger on the day.  MBS up 3 ticks (0.09).  10yr down 4.6bps at 4.121

04:43 PM

Late afternoon weakness shaken off.  10yr down 5.4 bps at 4.113, near the lows.  MBS up 6 ticks (.19).

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