Between the weaker momentum throughout October and the brief jump up to 0.95% for 10yr yields, bonds had a decent scare in the first trading hour of election night. After that, however, a big rally ensued as election results came into better focus. That rally continued into 2am this morning at which point 10yr yields had made it all the way back down to .72%. The rest of today's trading session was basically a confirmation of a previous range (0.72-0.79). Neither data, nor the Fed, nor election updates had any relevant impact. Bonds want bigger news to motivate bigger moves and tomorrow's Jobs Report isn't likely to be up to the job. Meanwhile, the mortgage market continues to outperform with another nice drop in rates today (on average) and yet another day of MBS outperformance.
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20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
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Jobless Claims 751k v 732k f'cast, 758k prev
Bonds opened stronger in the overnight session but bounced hard at the 0.72% technical level at the start of the European session. Yields have been rising since then, but are still down 1.5 bps on the day. MBS are starting out an eighth of a point higher. S&P futures are up 1.8%. No reaction to 8:30am Econ data. Traders still "trading it out" post-election, and waiting on the Fed this afternoon.
Since 2am, steady weakness has continued in linear fashion for Treasuries. MBS had been doing a good job outperforming, but have nonetheless lost ground from AM highs. There's no new news behind the move. Rather, it's a broad stroke bounce off the .72 range boundary in the overnight session. 10yr now set to challenge the next range boundary overhead at .79.
mid-day weakness gave way to a supportive bounce for bonds. The 0.79% ceiling held firm well before the Fed took the stage, and wasn't even remotely challenged afterward. MBS are outperforming. Rates are lower. Treasuries are range-bound waiting on more political clarity. NFP in the morning, but a huge reaction would require an even huger surprise.
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