Small Scale Volatility Leaves Bonds Slightly Weaker
The day began on a modestly positive note and ended with bonds trading just slightly weaker. There was little to glean from the price action and no stand-out correlations with news or data. The only exception was a series of headlines at 5am regarding Moderna booster efficacy with respect to the omicron variant. After that, 2-way volatility at the 9:30am NYSE open was the most notable event. When stocks bottomed out and recovered some of their losses in the afternoon, bond yields followed.
Fed MBS Buying 10am, 11:30am, 1pm
Moderately stronger in Asia, but gains largely erased in Europe and early US trading. EU bonds leading the way. Stocks down more than 1%. 10yr down 1.2 bps and MBS up 2 ticks (0.06).
Yields bottomed out just after 11am and have been creeping back up since then. Less volatility for MBS. 10yr yield still down 0.7bps at 1.40% and MBS up 3 ticks (0.09) at 102-08 (102.25).
Steadier selling momentum in the past hour with Treasuries turning negative on the day, but just barely. 10yr up half a bp at 1.41. MBS still positive, but now up only 1 tick (0.03).