After a modest day of gains on Friday, bonds covered some more serious ground today. 10yr yields were more than 4bps lower at the 3pm CME close, and roughly 8bps lower versus Friday's highs. Does this mean the prevailing negative trend is reversing? Or are we simply taking a break while bonds wait for more info?
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20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
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New Home Sales 959k vs 1.025m f'cast, 994k prev
Bonds were stronger out of the gate in Asia, largely following weakness in the stock market. Similar correlation hit once again at the start of the European session where 10yr yields (and stocks) hit their lows together shortly after the European open. Both have been inching back toward higher levels since then, but S&P futures are still down 1% on the day and 10yr yields are down 2.85bps at .812. MBS are starting the day up almost an eighth of a point.
Rallying fairly well into the PM hours, mostly following a rather large selling spree in stocks (S&P futures down 2.55% on the day). 10yr yields are down 4.5bps to .796 and 2.0 UMBS are up 5 ticks (.16) now at 103-04 (103.125).
Stocks lost almost 1% between 11:15am and the lows of the day at 1:30pm. Contrast that with the bond market where 10yr yields were .79% on both occasions. That builds a case for today's resilience meeting resistance at the .79% technical level. MBS are up an eighth of a point, just a bit off their mid-day highs, but by no means in distress.
MBS Market Alerts
