After a big sell-off in response to yesterday's Fed announcement, bonds rallied back today. The gains were slow and steady at first, but the pace quickened at 9:30am (a popular time of day for increased momentum in bonds, even though it's the NYSE open). Data was overlooked and 10yr yields ultimately made it down to the 1.80% technical level (adjusted to 1.795 today to better fit the intraday bounces), but were unable to sustain a breakout. As such, we are left with the possibility that today was another day in the ongoing rising-rate consolidation process (one that just happened to be green) even though the rate bulls are hoping it helps build a case for support at recent ceilings.
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Fed MBS Buying 10am, 11:30am, 1pm
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Durable Goods......... -0.9 vs -0.5 f'cast, 3.2 prev
GDP, Q4, advance..... 6.9 vs 5.5 f'cast, 2.3 prev
Jobless Claims ..........260k vs 260k f'cast, 290k prev
Surprisingly stable considering yesterday's events and moderately stronger by the domestic open. 10yr down 4bps at 1.832 and 3.0 UMBS up an eighth of a point.
Additional gains into the 10am hour, but backing away from a technical breakthrough now. 10yr bounced at 1.795, now "only" down 6.6 bps at 1.807. MBS up just over a quarter point.
Respectable 7yr auction stats despite intraday bond rally. No major reaction though. 10yr down 8bps at 1.792 and MBS up 10 ticks (.31).
yields retreated back above the 1.80% pivot point by the 3pm CME close (currently 1.814%). MBS are a quarter point higher on the day, but also off their best levels.
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