Weakness Reinforces Range Ahead of Jobs Report

Foreign central bank announcements pushed bond yields higher early in the day, never to recover.  10s closed up more than 5bps and MBS lost more than a quarter point.  This weakness takes both MBS and Treasuries squarely back across the mid-point of the consolidation range of the past 4 weeks, and just when it looked like bond bulls had the upper hand. Friday’s jobs report isn’t packing its typical punch, but “jobs report Friday” is nonetheless a day with greater potential for movement.

Econ Data / Events

Fed MBS Buying  10am, 11:30am, 1pm

Jobless Claims….. 238 vs 245 f’cast, 261 prev Q4 labor costs….. 0.3 vs 1.5 f’cast, 9.3 prev ISM Services ……59.9 vs 59.5 f’cast, 62.3 prev

Market Movement Recap

08:46 AM Flat overnight, then weaker in pre-market trading following Bank of England rate hike.  ECB press conference adding pressure now.  10yr up almost 6bps and MBS down more than a quarter point.

10:02 AM Still under pressure following ECB comments.  No major impact from econ data.  10yr yields up 7bps to session highs of 1.84+.  3.0 UMBS down 3/8ths of a point.

03:08 PM Bonds found their footing shortly after the last update and have been sideways to slightly stronger since then (but still in weaker territory on the day).  10yr now up only 5bps at 1.82 and MBS down only a quarter point.
Source: Mortgage News Daily