Yesterday's Fed announcement managed to deliver the bare minimum of the market's expectations and underdeliver on fairly reasonable hopes. That resulted in a logical protest from both stocks and bonds. This carried over into today, but bonds have yet to even attempt to break their prevailing range.
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20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
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Jobless Claims 860k vs 850k f'cast, 893k prev
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Housing Starts 1.416m vs 1.478m f'cast, 1.492m prev
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Philly Fed Index 15.0 vs 15.0 f'cast, 17.2 prev
Stock prices and bond yields drifted lower in the overnight session with 10yr yields almost 4bps lower by 8am. Early econ data isn't hurting with none of the 3 reports beating forecasts. Yields are now down 4.6bps at .653 and 2.0 UMBS are up an eighth at 103.125.
Bond yields bounced with stock prices--neither by very much. 10yr yields are still down 3bps at .667. Stocks are still off almost 1.5%. 2.0 UMBS are still up 2 ticks (0.06), but down just as much from the highs seen at 9am.
MBS hit their weakest levels around 1pm and have bounced modestly since then. 2.0 UMBS are up 2 ticks (0.06). 10yr yields are near the highs of the day but still down 1.5bps at .684. Stocks parted ways with bonds at 11am and moved back toward their lows (down 1.5% in S&P futures).
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