Bonds started the day in roughly unchanged territory and promptly began tanking.  This was a bigger deal for MBS than Treasuries as the latter managed to stay UNDER yesterday’s intraday high yields.  Heavy losses in stocks at the NYSE open helped bonds a bit, but weakness returned ahead of Powell’s congressional testimony.  As Powell spoke, yields healed and bonds eventually turned green.  This makes for a promising technical cue as far as charts are concerned, but for reasons discussed in today’s video, it might make sense to wait for just a bit more convincing before shifting your lock/float approach in this market.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Case Shiller Home Prices (y/y) 10.1 vs 9.9 f’cast, 9.2 prev
    FHFA Home Prices (y/y) 11.4 vs 11.1 prev

  • Consumer Confidence 91.3 vs 90.0 f’cast, 88.9 prev

Market Movement Recap

08:51 AM

Roughly unchanged overnight with European bond market weakness counterbalanced by a half-percent loss in equities futures.  Treasuries are right in line with yesterday’s close (which was near 1-year highs in 10yr yields – 1.37%-ish).  2.5 UMBS are down a few ticks (-0.06 at 103.875).

09:44 AM

Sharp losses heading into NYSE Open (9:30am), but even sharper stock losses since then.  Bonds like it.  Big, friendly bounces in TSYs and MBS.  Most of the day’s weakness erased in 2.0 and 2.5 UMBS.  Treasury yields just turned green.  

10:45 AM

Powell testimony providing a moderate boost for bonds so far.  10yr yields down 2bps on the day and MBS now back to unchanged.  No new revelations from Powell (but the absence of any major acknowledgment of stronger econ data, etc. is bond-positive).

12:30 PM

Bonds weathered Powell testimony fairly well.  10yr down 1bp at 1.36% and MBS down less than an eighth (-2 ticks or 0.06 in 2.5 coupons).  Stocks still red, but less so than 10am.

03:14 PM

MBS are back in positive territory now, at least as far as 2.5 coupons are concerned .  10yr yields are holding steady roughly 1bp lower on the day.  All this despite stocks having bounced back (+0.20% vs 5pm y’day).  Not a bad showing, especially in light of today’s intraday highs being under yesterday’s.