Bonds Stay Resilient as Traders Begin Punching Out For The Holidays

After starting flat, bonds were under pressure for 15 minutes following the European Central Bank (ECB) announcement.  EU bonds remained under pressure, but US bonds bounced back after downbeat econ data at 8:30am.  After EU markets closed for the day, the rally progressed with help from heavy stock losses.  10yr yields hit the 3pm close several bps lower, nearly challenging the recent floor in the low 3.4s.  MBS gained just over an eighth. Today was the last consequential trading day before Christmas and the market environment should be shifting into holiday mode (less participation and all that comes with it) until January 5th or 6th at the earliest.

Econ Data / Events
    • Jobless claims
      • 211k vs 230k f'cast, 231k prev
    • Philly Fed 
      • -13.8 vs -10.0 f'cast, -19.4 prev
    • NY Fed Manufacturing
      • -11.2 vs -1.0 f'cast, 4.5 prev
    • Retail Sales
      • -0.6 vs -0.1 f'cast, 1.3 prev
Market Movement Recap
08:34 AM

Initially weaker after the ECB announcement  but those losses were more than erased by the 8:30am econ data.  10yr down 1bp at 3.468.  MBS roughly unchanged depending on when you look (illiquidity distorting prices).

12:01 PM

Some weakness heading into 10:30am, largely led by EU bonds.  Back near nest levels now.  MBS down only 1 tick (0.03) and 10yr yields down 3bps at 3.448.

01:44 PM

Well into positive territory now as market takes a risk-off approach (stocks down almost 3%).  10yr down 4.3bps at 3.436 and MBS up just over an eighth of a point.

03:26 PM

Off the day's best levels in Treasuries but still stronger, down 3bps at 3.448.  MBS are right in line with previous highs--same levels as the last update.

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