Mixed Day For Bonds; MBS Outperform

Today’s trading session had a bit an anticlimactic “day after” vibe following the bigger drama associated with yesterday’s Fed announcement.  There were gains across the board in the overnight hours then gradual weakness into the afternoon.  The losses were most notable in Treasuries and almost exclusively an issue for the long end of the yield curve.  Some of that had to do with a correction to yesterday’s curve trading which heavily favored the long end.  Additionally, Treasuries were under pressure due to hefty corporate bond issuance.  That combination of factors helped MBS remain green even as 10yr yields turned red.

Econ Data / Events

Fed MBS Buying  10am, 11:30am, 1pm

Jobless Claims ………214k vs 220k f’cast, 229k prev Housing Starts ………1.769m vs 1.69m f’cast, 1.657m prev Philly Fed Index………27.4 vs 15.0 f’cast

Market Movement Recap

09:26 AM Decently stronger overnight with gains into 6am.  Stock selling mirrored bond gains and both bounced at 6am.  EU inflation numbers hurt a bit.  Then 8:20am CME open brought sellers.  10yr now down only 2bps at 2.172.  MBS up an eighth of a point.

01:09 PM No major drama so far.  Bonds recovered nicely after a quick bout of selling at the 9:30am NYSE open.  10yr down 2.9bps at 2.163.   MBS up 19bps at 100-27 (100.84) in 3.5 coupons.  

03:18 PM Treasuries are under a bit of pressure as yesterday’s curve trades are unwound and corporate issuance is absorbed.  10yr is back into negative territory, but just by a hair (effectively unchanged).  MBS are still up 5-6 ticks (.16-.19).
Source: Mortgage News Daily