More Gains, But Harder to Hold After Europe Stopped Trading

Bonds made decent gains overnight as overseas markets continued to trade “global growth concerns” (with an eye on China’s covid situation among other things).  Virtually all of the improvement occurred during European trading hours with a modest give-back in the US-only hours.  This isn’t always an important detail, but it seems notable in the current case given that both days this week have seen the same pattern whereas the last major attempt at consolidation saw the opposite pattern.  

Econ Data / Events

Fed MBS Buying  10am, 11:30am, 1pm

Durable Goods…………………….. .8 vs 1.0 f’cast, -1.7 prev Nondefense, Excluding Aircraft….. 1.0 vs 0.5 f’cast, -0.3 Philly Fed Services New Orders ….13.6 vs 31.0 prev Philly Fed Services Biz Activity…… 29.3 vs 32.4 prev

FHFA Home Prices y/y 19.4 vs 18.3 prev Case Shiller Prices y/y 20.2 vs 18.9 prev New Home Sales  763k vs 765k f’cast, 835k prev

Market Movement Recap

09:03 AM Initially weaker overnight, but rallying since the start of the EU session.  10yr down 7bps to 2.747 (best levels).  4.0 UMBS down more than a third (12 ticks) at 100-04 (100.125) 

10:16 AM Weaker bounce heading into 10am hour with MBS briefly down almost a quarter point from the highs, but now down only an eighth and recovering.  10yr at 2.75 after bouncing up toward 2.77 briefly, but off lows of 2.736

01:11 PM moderate weakness since 11am, now leveling off with 10yr yields still down 5bps at 2.764 and MBS still up about a quarter of a point.

02:34 PM Additional weakness after 2pm.  10yr still down more than 4bps on the day, but up more than 5bps from intraday lows.  MBS still up an eighth on the day, but down a quarter from intraday highs.  No obvious market movers driving the selling apart from the EU handoff (i.e. stronger during EU hours, and weaker after).
Source: Mortgage News Daily