Very Low Volatility After Early Morning Rally

Bonds were sideways to slightly weaker in the overnight session, but bounced back at 7am ET.  The two most notable developments at the time were weak earnings from Wal-Mart and a comment from Bessent on the mix of Treasury issuance. While the former may be an easier thing to understand and write about, the latter served as the source of the bond rally. Bessent essentially said he wasn’t in a hurry to add more longer-term debt relative to short-term debt, and that’s good for things like mortgage rates, all other things being equal. It’s also evident in the obvious yield curve disparity with 2yr yields higher on the day and 10yr yields lower. 

Econ Data / Events

Jobless Claims

219k vs 215k f’cast, 214k prev

Continued Claims

1869k vs 1870k f’cast, 1845k prev

Philly Fed Index

18.1 vs 20.0 f’cast, 44.3 prev

Philly Fed Prices

40.5 vs 21.90 prev

Market Movement Recap

09:29 AM Stronger overnight and modestly weaker after the data.  MBS up 1 tick (.03) and 10yr down 1.9bps at 4.514

01:37 PM Very flat since the AM rally.  MBS up an eighth and 10yr down 3.4bps at 4.50

03:48 PM Near best levels amid very low volatility.  MBS up 5 ticks (.16) and 10yr down 3.2bps at 4.502