Any additional weakness after Wednesday's blood-letting would have added too much insult to what was already a fairly big injury. That made for a tense morning as bonds briefly ticked into negative territory early. Thankfully, they didn't stay there long, nor did they break beyond yesterday's weakest levels. We're left with the impression that traders are settling into a some semblance of a range before the next big motivation strikes. Friday's jobs report isn't the likeliest candidate there, but after last month's reaction, we definitely can't rule out a volatile response in the morning. If it happens, wages and other internals could be the bigger story than the headline payroll count.
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Fed MBS Buying 10am, 11:30am, 1pm
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Jobless Claims 215k vs 225k f'cast, 233k prev
Unit Labor Cost (Q4) 0.9 vs 0.3 f'cast, 0.3 prev -
ISM Services 56.5 vs 61.0 f'cast, 59.9 prev
Bonds modestly stronger overnight despite more highs in oil and slight gains in stocks. 10yr down 2.7bps at 1.851 and MBS up an eighth of a point
Steady weakness starting at the 8:20am CME open and accelerating at the 9:30am NYSE Open. Some help from weaker ISM numbers. 10yr and MBS now both roughly unchanged after being slightly weaker before the data.
Decent bounce back during Powell presser and after weaker ISM data, but rally stalled out at noon and has been moderating since then.
MBS at highs of day, outperforming Treasuries as the latter continues suffering from elevated corporate supply and more direct impacts of inflation implications.
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