Solid Conclusion to Superlative Week

Friday ended up being rather uneventful for the bond market, as long as you gave the drama time to play out.  The drama in question came in the form of seemingly odd comments from NY Fed President Williams who said the Fed isn't really considering rate cuts.  Taken out of context, that was a comical and confusing assertion given that Powell said the opposite yesterday. Once the market took a moment to appreciate the context, trading levels got right back to where they were before Williams.  Specifically, bonds were roughly unchanged from yesterday afternoon--a stance they maintained through the 3pm CME close. With that, bonds managed to have a massively positive reaction to a Wednesday Fed Day WITHOUT having to give any of the gains back via token correction or otherwise.  It's one of the calmest landings we've ever seen given the size and pace of the rally.

Econ Data / Events
    • NY Fed Manufacturing
      • -14.5 vs 2.0 f'cast, 9.1 prev
    • Industrial Production
      • 0.2 vs 0.3 f'cast, -0.9 prev
Market Movement Recap
09:35 AM

Initially weaker overnight, then stronger with Europe.  Weaker again after Williams comments, but recovering now.  MBS up 1 tick (.03).  10yr up .9bps at 3.93

12:17 PM

Sideways in a fairly narrow range.  10yr down half a bp at 3.917.  MBS down 2 ticks (0.06).

02:49 PM

Weakest levels of the afternoon with MBS down 6 ticks (.19) and 10yr yields up 1.1bps at 3.932.

03:35 PM

Off the weakest levels now and coasting into the weekend.  MBS down only an eighth and 10yr yields down just under 1bp at 3.913

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