Powell Sticks To Same Script (The One That Bonds Don’t Really Like)

Today’s much-anticipated Fed announcement did indeed bring a tactful allusion to the “pivot” potential that had captured the hearts and minds of market participants over the past few weeks.  That said, it also brought the sobering warnings from Powell that were likely to accompany any such allusions.  Markets ended up focusing on those warnings, with stocks and bonds ultimately selling off sharply into the close. 

Econ Data / Events

ADP Employment

239 vs 195 f’cast, 192 prev

Market Movement Recap

09:04 AM Mostly sideways overnight and little-changed so far this morning.  10yr yield down less than 1bp at 4.04.  MBS up an eighth of a point.

12:01 PM Unchanged from previous update despite very modest back and forth.  Best levels around 11am when MBS were up 6 ticks (.19) and now up only 2 ticks (0.06).

02:24 PM First move after Fed is good for bonds, largely due to inclusion of pivot hints.  10yr down 4.5bps at 4.003 and MBS up half a point.  Markets waiting to hear from Powell in the press conference

02:54 PM Gains erased after Powell says it’s premature to even talk about a rate hike pause.  10yr up 1.7bps at 4.063 and MBS down 2 ticks (0.06).

05:30 PM Sharp losses by the close as press conference momentum continued.  10yr up 4.8bps at 4.096 and MBS down just under half a point. 
Source: Mortgage News Daily