Bonds began the day in weaker territory but rallied back to nearly unchanged levels after several comments from inbound Treasury Secretary Janet Yellen. Of particular note were Yellen's comments on the possibility of repealing certain tax cuts as well as the need to get the federal budget on a more sustainable path. Both of those bode well (or "better," anyway) for Treasury issuance vs demand. The econ calendar was silent and other market moving headlines were scarce. Traders are waiting for the next major cue that settles the debate between keeping the broader negative trend intact or riding the recent positive correction back to lower-yield technical boundaries.
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20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
Bonds were moderately weaker at the start of the overnight session, in line with gains in global equities markets. Trading has been flat since the start of the European session with 10yr yields 2bps higher at 1.107%. UMBS are starting the day down 2 ticks (0.06) just a hair under 103-00.
Bonds rallying a bit on Yellen comments (i.e. parts of tax cuts should be repealed, Federal budget needs to be put on sustainable path). 10yr yields dropped from 1.116 to 1.090 as a result, but are still 1bp higher on the day. UMBS 2.0 coupons are down 1 tick (.03) on the day, but up 2 ticks from the morning lows.
Uneventful since the last update. Yields rose modestly and briefly by way of correcting to the Yellen-inspired rally, but they're now back in line with the lows of the day. MBS are dropping off a bit in the afternoon with both 2.0 and 1.5 coupons about 2 ticks (0.06) off their best levels. Not a significant move by any means.
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