Insult, meet injury? Oh, you're already acquainted?! Of course you are... It's 2021 and we're talking about the bond market after all. Just over 24 hours after bonds looked set to maintain a friendly trend all week, we're closing near the weakest levels of the week and firmly rejecting a break below 1.62% (a level that's served as a good line in the sand for stronger rally prospects). Most frustratingly, there are no obvious scapegoats for today's price action--just a general 2-day trend leading back from yesterday morning's low yields.
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Fed MBS Buying 10am, 1130am, 1pm
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Annual Core PCE 1.4 vs 1.5 f'cast, 1.5 prev
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Consumer Sentiment 84.9 vs 83.6 f'cast, 83.0 prev
Bonds weaker overnight with losses focused on European hours (stronger data, mainly). We could also call this a rejection of a break below 1.62% in 10yr yields. Either way, the losses are merely "moderate" so far today and we're still well shy of Monday's 1.70+ highs (1.665% currently). MBS are down less than an eighth. Minimal positive impact from PCE data (slightly weaker core inflation).
Bonds pushing back against overnight weakness a bit more, but progress remains slow. 10yr yields up only 1.6bps now at 1.65% and 2.5 UMBS down only 1-2 ticks depending on the moment (-0.3 to -0.06).
AM rally fizzled just after 11am. No particular reason. MBS corrected a bit more abruptly than Treasuries, but both have stabilized in the past few minutes. UMBS 2.5s are down only 1 tick on the day and 10yr yields are up only 1.6 bps at 1.65%.
More selling... steady all day really, despite a brief stin from 10am to noon. Yields at highs of day. MBS prices at lows. No new specific motivation. Very linear 2-day trend. Bonds just sticking to the script, apparently.
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