There are only so many ways to explain what happened today and those explanations go so far in accounting for counter-intuitive movement. Specifically, bonds rallied despite 2 hawkish central bank announcements (which follow hard on the heels of yesterday's hawkish move from the Fed). This required stock market weakness and a shift in asset allocations as the last vestiges of 2021's normal liquidity levels dry up for the holidays. An abundance of short positions (and a subsequent short squeeze) played a strong supporting role.
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Fed MBS Buying 10am, 11:30am, 1pm
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Philly Fed Index 15.4 vs 30.0 f'cast, 39.0 prev
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Jobless Claims 206 vs 200 f'cast, 188 prev
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Housing Starts 1.679m vs 1.568m f'cast, 1.502m prev
Slightly stronger early in the overnight session. Gains erased after Bank of England rate hike. 10yr unchanged at 1.46+. MBS up almost an eighth.
Nice rally at 9:30am after modest strength in the previous hour. 10yr now down 2.5 bps at 1.433 and 2.5 UMBS up nearly a quarter of a point.
No new gains in Treasuries, but MBS continued higher into the 1pm hour. Leveling off since then with 2.5 coupons up more than a quarter of a point.
MBS Market Alerts
