We've talked a lot about the linear uptrend in bond yields that began in April. It was defeated by the end of June and bonds began drifting sideways. But now they may be making a case for a new trend toward lower rates.
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11:30-11:50 AM (ET) - Fed 30yr UMBS Buying
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Jobless Claims 1.314m vs 1.375m f'cast, 1.427 prev
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Continued Claims 18.062m vs 18.95m f'cast, 19,290m prev
Once again, stocks and bonds made a modest move to start the overnight session and were then extremely flat since then. MBS starting out up 1 tick (0.03) and 10yr yields are down 1.3bps at .653
Bonds are rallying nicely now as the stock market swan dives. 10yr yields down more than 4bps to .62%+ and UMBS 2.0 up an eight, quickly approaching 103.00
MBS outperforming as Treasuries prepare for the 30yr bond auction. UMBS 2.0 up nearly a quarter point, now at all-time highs of 103.
There's a bit of a run on bonds at the moment, and it is NOT relying on stock market weakness. 10yr yields are challenging the lowest levels since mid May and UMBS 2.0 coupons are up almost 3/8ths of a point trading at 103-04 (103.125).
Bond rally ran out of steam--especially for MBS. We're still stronger on the day, but more than a quarter point off the highs. No real reason for the reversal apart from the strength that came before it.
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