Today is one of those interesting and massive selling sprees in the bond market that raises very logical questions. If we assume that the Fed meeting was/is the reason for the weakness (and that's a safe bet), then why didn't we see the sell-off yesterday? Sure, we could consider the fact that the rest of the world's financial markets are closed by the time the Fed announcement comes out or that traders may have other reason to wait to fully trade the implications until the following day, but even then, it feels overdone. Today's video discusses this paradox as well as a few of the potential (but not entirely satisfying) explanations.
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- Jobless Claims
- 213k vs 218k f'cast, 208k prev
- Continued Claims
- 1.379m vs 1.400m f'cast, 1.401m prev
- Jobless Claims
Sideways to slightly weaker overnight, but now selling heavily in the 9am hour. 10yr yields up 11.6bps at 3.652 and MBS down 5/8ths of a point.
With the severe sell-off out of the way just before the noon hour, bonds have managed to bounce back modestly. 5.0 coupons are now down "only" 18 ticks (.56) and 10yr yields are up only 14bps to 3.674 after being as high as 3.716.
The entire day has been painful--sometimes more, sometimes less. The 3pm close has been one of the "more" times. 10s are back near the 3.70 mark and 5.0 MBS are down about 3/4ths of a point.
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