This week began with a decisive breakout to higher yields in the bond market. Trump's comments on stimulus have been a key source of volatility although the Treasury auction process proved to be a relevant consideration mid-week. Bonds managed to hold under the important 0.79% ceiling despite additional upbeat Trump comments on stimulus and a lackluster 30yr bond auction. That's a good sign, but it could also simply reflect traders closing short positions ahead of a 3 day weekend. Bottom line: it's not too soon to HOPE for support in the bond market, but perhaps a bit too soon to count on it.
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20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
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Jobless Claims 840k vs 820k f'cast, 849k prev
Bonds continued to build on the technical support seen at .79% in the overnight session, ultimately making it as low as .765% in 10yr yields. We're about a bp higher at 8:30am, but not trending higher at the moment. MBS are perfectly unchanged.
30yr auction was a bit soft and bonds weakened slightly in response. 10yr yields still down just over 1bp at .772 and 2.0 UMBS are down 2 ticks (0.06) at 103-08 (103.25).
MBS briefly hit their lows of the day just after 2pm--the same time of day as yesterday's acceleration in weakness. Could be there are a few traders making adjustments to MBS holdings or originators dumping supply after the prepayment speed report 2 days ago. Small potatoes in the big picture though. Treasuries remain just over 1bp lower on the day (in yield). 2.0 UMBS are an eighth lower (in price).