Volatility Picked Up After a Slow Start

This morning, more than halfway through the international trading day, bonds were on track for the narrowest trading range since February 24th. The low volatility didn’t last. Sellers surfaced in response to several war-related headlines. Bond yields followed oil prices higher from 9am through 1pm ET.  That said, it was still a fairly light day of movement in bonds with MBS only losing about an eighth of a point depending on when you look and 10yr yields up 3bps at 4.31+ in the final hour of trading. 

Econ Data / Events

Continued Claims (Apr)/04

1818.0K vs 1810K f’cast, 1794K prev

Jobless Claims (Apr)/11

207.0K vs 215K f’cast, 219K prev

Philly Fed Business Index (Apr)

26.7 vs 10 f’cast, 18.1 prev

Philly Fed Prices Paid (Apr)

59.30 vs — f’cast, 44.70 prev

Market Movement Recap

08:30 AM Giving up overnight gains before data and no change since. MBS unchanged and 10yr down half a bp at 4.279 (up from lows of 4.265).

10:04 AM 10yr yields moved up 1bp back to unchanged levels of 4.281 and MBS are now down 1 tick (.03)

01:16 PM MBS down an eighth. Lows of the day. 10yr up 3.1bps at 4.315. Highs of the day.

03:43 PM Flat afternoon.  MBS down 3 ticks (.09) and 10yr up 2.4bps at 4.308

Thursday has thus far been the slowest and most sideways day since February 24th, before the start of the Iran war. A lull in war-related developments is likely helping. While there are plenty of isolated headlines, the only thing the market really cares about is the timeline for the war to be over. As such, the present ceasefire is a sort of limbo that’s clearly better than peak tension in late March, but not an “all clear” to jump back in the market (unless it’s the stock market, apparently). There are a few economic reports this morning, but no market reaction.

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Office of Management and Budget Director Russell Vought told the House Budget Committee Wednesday that the Community Development Financial Institutions Fund is still a target for elimination by the administration because it promotes “woke” ideology.

Dozens of plaintiffs say they still haven’t received a full explanation over the mass termination announced last April by FHFA Director Bill Pulte.

FundingShield’s latest report notes the improvement in remediation efforts among lenders, but closing protection lenders remain a key source of file problems.

Marketing services firm LeadPoint said it thought it had gained compliance after Connecticut officials issued a prior consent order and penalty in 2020.

President Donald Trump said he would fire Federal Reserve Chair Jerome Powell if he does not resign after his term as head of the central bank ends in May. Trump made a similar threat against Fed Gov. Lisa Cook before attempting to fire her last August.

Very Small Token Pull-Back

Nothing really happened on Wednesday as far as the bond market was concerned. Yields were technically a few bps higher thus preserving the phenomenon of rally momentum being limited to 48-hour windows since the start of the Iran war. Despite a barrage of war-related headlines, there was remarkably light volatility in oil prices. Markets seem to be waiting on truly momentous developments (such as a major resumption of hostilities or a confirmed/permanent ceasefire). In the meantime, stocks and bonds both did their own thing today without any of the recently typical correlation to oil prices.

Econ Data / Events

Import prices mm (Mar)

0.8% vs 2% f’cast, 1.3% prev

NY Fed Manufacturing (Apr)

11.00 vs -0.5 f’cast, -0.20 prev

NAHB Builder Confidence

34 vs 37 f’cast, 38 prev

Market Movement Recap

08:46 AM Modestly weaker overnight, partly following oil.  MBS down 3 ticks (.09) and 10yr up 1.8bps at 4.268

12:55 PM Weaker into the noon hour, but stabilizing now. MBS down an eighth and 10yr up 3.5bps at 4.284

02:34 PM little-changed since last update. MBS down an eighth and 10yr up 3.1bps at 4.281

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