http://www.mortgagenewsdaily.com/topic/mbs Mortgage Rates Blog https://www.mortgagenewsdaily.com/markets/mbs-recap-09112026 Fri, 11 Sep 2026 21:29:48 GMT 6aa481245a7ecb8ca16ce191 Matthew Graham AM Rally Completely Erased By The Close This morning's paradoxical rally lasted 30 whole minutes. Bonds turned around at exactly 9am and proceeded to completely erase the AM gains. There were no compelling macro motivations for the reversal apart from a modest rise in oil prices. While oil price lows and highs perfectly matched bond yields in terms of timing, the bond selling was disproportionately larger. This is highly suggestive of short covering being a component of the morning rally. In other words, traders who had open bets on higher rates simply closed those positions quickly this morning. From that point on, the market was free to trade as it pleased. 2yr/10yr spreads remained mostly flat which suggests broad selling across the curve and no change in the paradoxical sentiment component of the AM rally. Bottom line: there were two rally motivations this morning, and one of them left the bond market open to correction.  Econ Data / Events m/m CORE CPI (Aug) 0.3% vs 0.2% f'cast, 0.2% prev m/m Headline CPI (Aug) 0.4% vs 0.4% f'cast, 0.1% prev y/y CORE CPI (Aug) 2.4% vs 2.4% f'cast, 2.5% prev y/y Headline CPI (Aug) 3.4% vs 3.4% f'cast, 3.4% prev Market Movement Recap 08:45 AM 2 way trading after CPI. MBS up 2 ticks (.06) and 10yr down 1.9bps at 4.947 12:45 PM Off best levels. MBS up 3 ticks (.09) after being up 3/8ths earlier this morning. 10yr still down 1.8bps at 4.947 but up from lows of 4.904. 03:50 PM MBS down 3 ticks (.09) and 10yr up half a bp at 4.97 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-09112026 Fri, 11 Sep 2026 13:43:22 GMT 6aa41428a6791958c5c6d88a Matthew Graham We've been saying for a while that the longer end of the bond market really wants to see the Fed get serious about fighting inflation. This is why yields spiked on July 29th when the Fed held rates steady and Warsh said he'd let the bond market do the heavy lifting. Now today, we have back-to-back inflation reports that resulted in Fed Funds Futures pricing in a 90% chance of a hike at next week's meeting. Fed Funds Futures are the only thing that's unequivocally selling off this morning. 2yr Treasuries (heavily impacted by Fed expectations) are mixed, but the longer end of the curve is now rallying thanks to the expectation of the rate hike and the hope that it pushes back against inflation. it also doesn't hurt that oil prices turned a corner overnight. Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-09102026 Thu, 10 Sep 2026 20:38:42 GMT 6aa323eca6791958c5c52850 Matthew Graham Ugly Snowball Selling Thanks to Oil and Inflation Data MBS lost nearly a full point by 4pm ET and 10yr yields were up 11.4bps at 4.95%. This is the highest since October 2023 when 10s briefly hit 5.006%.  At one point in the overnight session, yields were slightly LOWER on the day. Things changed in waves. First wave: oil prices surged overnight and had already broken $100 but the time PPI came out. Second wave: PPI was roughly in line with forecasts, but internal components suggested a 0.1 increase to core PCE inflation. The reaction was the sharpest of the day for bonds. Third wave: late day illiquid redistribution after 30yr bond auction (although this could also be incidental drift ahead of Friday's CPI data). If we could only focus on 2 things, it would be the acceleration in the fuel price trend and the unfriendly PCE implications in today's PPI data.  Econ Data / Events Core PPI m/m (Aug) 0.2% vs 0.3% f'cast, 0.2% prev Core PPI y/y (Aug) 4.6% vs 4.6% f'cast, 4.2% prev Jobless Claims (Sep)/05 206K vs 205K f'cast, 206K prev PPI m/m (Aug) 0.4% vs 0.4% f'cast, 0% prev PPI y/y (Aug) 5.4% vs 5.3% f'cast, 4.7% prev Market Movement Recap 09:39 AM Much weaker on a combo of oil and PPI reaction. MBS down 5/8ths and 10yr up 8bps at 4.92 01:09 PM MBS down 22 ticks (.69) and 10yr up 8bps at 4.92 03:39 PM MBS down just over 7/8ths of a point and 10yr up 11.6bps at 4.957 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-09102026 Thu, 10 Sep 2026 13:18:22 GMT 6aa2bccca6791958c5c45df6 Matthew Graham It's been a rough couple of days for the bond market. Yesterday, it was Bessent and the reaction to the Treasury buyback announcement. Today it is an overnight surge in oil prices and a lackluster reaction to the Producer Price Index (PPI). PPI doesn't tend to move markets as much as CPI (due out tomorrow), but it certainly can for two reasons: on the rare occasions when it is released before CPI and when its components suggest an increase in PCE inflation. In other words, parts of the PPI data have a bearing on PCE and PCE is ultimately what matters most. The market doesn't always trade it that way because PPI/CPI reveal so much about PCE that PCE is less of a surprise by the time it comes out. About half of this morning's weakness was in place before PPI due to the overnight oil price spike. Bonds are showing their first indication that they might try to find their footing with 10yr yields around 4.92, but we're not counting chickens yet.  Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-09092026 Wed, 09 Sep 2026 19:52:23 GMT 6aa1c7e0a6791958c5c2a7ee Matthew Graham Bonds to Bessent: Challenge Accepted When the Yellen Treasury rolled out the buyback program in 2023/2024, they were careful to refer to it as strictly focused on liquidity and cash management. If they were secretly interested in influencing the yield curve, we'd never know. Contrast that to Bessent who specifically told reporters that long term rates were too high and that there was a "signaling component" to the recent decision to increase buybacks. Rhetoric ramped up further this morning when he said "I am the house now," and "you can bet against me if you want." The bond market's responded with a hearty "challenge accepted." Treasury announced a $6bln long-end buyback, which was apparently not quite the bazooka that traders were positioned for. Bonds tanked immediately with 10yr yields hitting new long-term highs just under 4.86% before settling near 4.83%. Despite the apparent drama, this is a small deal in the big picture--especially in light of today's sharply higher oil prices which likely already would have been pushing yields higher if traders weren't waiting on the buyback announcement.  Market Movement Recap 09:41 AM MBS down 3 ticks (.09) and 10yr up 1.5bps at 4.805 11:24 AM MBS down almost 3/8ths and 10yr up 6.5bps at 4.854 02:40 PM MBS down a quarter point and 10yr up 4.2bps at 4.832 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-09092026 Wed, 09 Sep 2026 14:30:01 GMT 6aa17bb4a6791958c5c2108b Matthew Graham Not much is going on in terms of scheduled economic events until Thursday and Friday's PPI and CPI reports respectively. Those could be very big deals as some investors think the results will determine "hike vs hold" at next week's Fed meeting. Today's biggest to-do is probably the 11am announcement of the next round of Treasury buybacks. Treasury already announced that the 10-30yr buybacks would be $4 bn per operation, but Bessent subsequently said that was a minimum amount. He spoke again this morning, and literally said "I am the house now," and "you can bet against me if you want." Sounds like he thinks pretty highly of the cards he's holding, and it looks like some of the recent bond market resilience could be a risk management strategy to not get caught on the wrong side of whatever we're about to see at 11am. After that, however, it will be back to reality (and the reality is that more Treasury buybacks = more Treasury issuance, all else equal. It's a zero sum game that is mathematically incapable of serving as lasting inspiration for buyers).  Here's what we mean by "recent resilience": Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-09082026 Tue, 08 Sep 2026 19:48:27 GMT 6aa07534a6791958c5c03eef Matthew Graham Early Strength Gives Way to Steady Selling Bonds started the day in fairly good shape with a rally at the open and a certain measure of defiance of another jump in fuel prices. The defiance quickly gave way to underperformance--a fact that suggests short-term tradeflow considerations for the bond market or perhaps that we're simply putting the trading day under too much of a microscope. Either way, both yields and oil prices were higher by the end of the day although the 10yr avoided breaking above last week's highs. Market Movement Recap 08:30 AM Roughly unchanged after overnight volatility. MBS unchanged and 10yr up 0.2bps at 4.79 10:37 AM MBS now down 2 ticks (.06) and 10yr up 0.1bp at 4.789 02:52 PM MBS down 5 ticks (.16) and 10yr up 2.3bps at 4.811 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-09082026 Tue, 08 Sep 2026 13:46:58 GMT 6aa020d4a6791958c5bf9a0d Matthew Graham To be sure, bonds are still very tuned-in to oil price movement with a high level of moment-to-moment correlation. That dynamic has seen yields trade both higher and lower so far today with most of the "lower" happening between 8:20 and 9:10am. Since then, both yields and oil are back on the rise. But the more interesting development is the slightly broader correlation which has seen bond yields holding under a 4.82% ceiling (10yr) even as oil prices made 3 new highs on 9/1, 9/3, and again this morning. There's likely a limit to this resilience in the event oil continues spiking, but it's mildly encouraging to see it on a week with heavy corporate issuance expected as well as a Treasury auction cycle.  Counterpoint: the bond market should still not be mistaken for something bullish, even if there's some relative outperformance vs oil prices. Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-recap-09042026 Fri, 04 Sep 2026 20:53:51 GMT 6a9b3e70a6791958c5b93bdd Matthew Graham Surprisingly Light Selling Given The Econ Data Today's market reaction to the big beat in NFP (162k vs 56k) certainly stretches the paradigm of most market watchers who've been in the game for more than a few years, but this has been the reality over the past year or two. Relatively rapid changes in labor force trends (and ongoing changes in seasonal distortions) have made the job count a less precise measurement of labor market health than it once was. Meanwhile, the unemployment rate has been far more insulated from that volatility (and far less prone to big beats/misses compared to NFP). This doesn't mean NFP doesn't matter. Clearly, it does. It just didn't hit bonds quite as hard as you might expect. Very early in the day, attention turned to the 3-day weekend and next week's inflation data. The modest increase in yields was an incidental byproduct. Econ Data / Events Average earnings mm (Aug) 0.3% vs 0.3% f'cast, 0.1% prev Non Farm Payrolls (Aug) 162K vs 56K f'cast, -23K prev Participation Rate (Aug) 61.6% vs -- f'cast, 61.4% prev Unemployment rate mm (Aug) 4.1% vs 4.1% f'cast, 4.1% prev Market Movement Recap 08:42 AM stronger overnight and now moderately weaker after NFP. MBS down 6 ticks (.19) and 10yr up 2.6bps at 4.796 09:57 AM Very decent recovery. MBS down only 1 tick (.03) and 10yr now unchanged at 4.768 03:03 PM MBS down 3 ticks (.09) and 10yr up 1.4bps at 4.782 Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs https://www.mortgagenewsdaily.com/markets/mbs-morning-09042026 Fri, 04 Sep 2026 12:42:27 GMT 6a9acb98a6791958c5b8593a Matthew Graham The jobs count surged higher (162k vs 56k f'cast) in this morning's jobs report. While such wild divergences will have the masses crying foul, and while this is a large beat, it's not the first time that the headline job count has been this far off forecasts. This is especially understandable amid recent volatility in labor force composition. One minor saving grace is the steady unemployment rate, but unfortunately, the participation rate increased by 0.2%, which means the unemployment rate would have fallen 0.1-0.2 (depending on rounding) all else equal. Bonds weakened immediately on the news but 10yr yields are currently only 2.8 bps higher on the day. The put this in better context, it has basically erased yesterday's Waller reaction in Fed Funds Futures--not a big move in the bigger picture.  Mortgage News Daily 0 http://www.mortgagenewsdaily.com/rss/mbs