Even though Fed Chair Powell didn't say anything remarkably new or different, markets read enough into his delivery to change the course of Fed Funds Rate expectations in a meaningful way. December's forecast (per Fed Funds Futures) was closer to 5.3% this morning, but rose to 5.5% by 2pm. There was even a reaction for the meeting in 2 weeks. Markets don't see a 50bp hike yet, but the reaction suggests that could change if NFP and CPI data come in hot between now and then. Short-term yields got whacked. 30yr yields moved lower on the day. MBS split the difference and sold off moderately. Today's video explains all of the above in greater detail.
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- Wholesale Inventories
- -0.4 vs -0.4 f'cast/prev
- Wholesale Inventories
modestly stronger overnight with lower volume exaggerating an EU-led rally. 10yr down 2.6bps at 3.94. MBS up 2 ticks (.06).
Initially weaker on Powell's prepared comments. Brief bounce back, but settling at unchanged to slightly weaker levels. 10yr up half a bp to 3.97%. MBS down just under a quarter point.
Moving back into positive territory now, mostly due to curve trading (yield curve -102.6bs!). 10yr down 2.8bps at 3.938 and MBS up 1 tick (0.03).
Weaker since 1pm with MBS down a quarter point from most recent highs and just over a quarter point on the day. 10yr up almost 1bp at 3.974.
MBS Market Alerts
