Frustrating Reasons For Weakness Are Still The Best Reasons We Have

Bonds were moderately weaker to start the overnight session.  Some sources cited more easing of covid restrictions in China as a catalyst.  While we see the gains in Chinese equities, these haven't translated well enough to serve as a scapegoat (plus, there's a disinflationary component as well, which further complicates that narrative).  Rather, what we're sure about is that today's volume was even lower than last Friday's half day.  Holiday trading mode is in full effect.  While that can be a frustrating and illogical justification for volatility, it's unfortunately still the best justification (discussed in more detail in today's video).

Econ Data / Events
    • Annual Home Price Indices 
      • Case Shiller 8.6 vs 8.2 f'cast, 10.4 prev 
      • FHFA 9.8 vs 11.1 prev
    • Monthly Home Price Indices
      • Case Shiller -0.5 vs -1.1 f'cast, -1.3 prev
      • FHFA 0.0 vs 0.1 prev
Market Movement Recap
09:26 AM

Moderately weaker overnight, led mostly by European trading with Bund futures tanking at 2am and continuing lower into 6am.  Treasuries followed, mostly after the domestic open at 8:20am ET.  10yr yields up 7.3bps at 3.824 and MBS down a quarter point.

12:29 PM

Additional weakness heading into EU close.  10yr up almost 10bps at 3.849.  MBS down half a point on the day.

05:17 PM

Modest gains in MBS in the PM hours with 5.0 coupons going out with just over a quarter point of losses.  10yr was flat all afternoon, right in line with the previous update at 3.849.

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