The Sun Also Sets on Bond Rallies

Don’t worry, the headline is much more dire than the underlying message.  Long story short, there are always some counter-trend influences even when the bond market is trending decisively in one direction.  One might refer to the trend since May or to last week’s CPI reaction as decisive.  As such, one might increasingly expect some ground to be given.  We could certainly argue that we’ve seen resistance in bonds ever since the middle of Thursday morning, following the CPI rally.  In a figurative sense, this re-sets the board for the next move, and big ticket economic data helps determine the direction of that move.

Econ Data / Events

NY Fed Manufacturing

-6.6 vs -6 f’cast, -6 prev

Market Movement Recap

10:32 AM Modestly weaker overnight but holding ground so far.  MBS down just over an eighth and 10yr up 4.3bps at 4.227.

01:04 PM Losing some ground as Powell speaks.  MBS down 2 ticks from highs (0.06) and an eighth on the day.  10yr up 4.4bps at 4.227

02:55 PM Still under some pressure, MBS down 7 ticks (.22) and 10yr up 4.3bps at 4.227

03:35 PM Weakest levels of the day for MBS, down 7 ticks (.22).  10yr up 4.6bps at 4.229