After a month of almost exclusive weakness, extreme volatility in early Nov, and the weakest day we’ve seen in a long time on Monday, bonds were definitely on the defensive heading into Veterans Day. There was a chance we were seeing 10yr yields indicate a willingness to use 0.96% as a ceiling on Tuesday and today’s trading provided a big vote of confidence in that outlook. 10yr yields rallied incessantly throughout the day, regardless of data, news, or goings-on in other markets. Even the 30yr bond auction failed to produce any of the typical auction day trading patterns. While the gains aren’t necessarily a final victory for bonds (far from it), they represent the first real, plausible effort to push back against bearish momentum from yields that are high enough to garner broader buy-in from bond traders.
Econ Data / Events
20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
Jobless Claims 709k vs 735k f’cast, 757k prev
Core CPI Inflation (y/y) 1.6 vs 1.8 f’cast, 1.7 prev
Market Movement Recap
After a rough futures session for yesterday, Treasuries are bouncing back today, again reinforcing technical ceilings at .96%. Bonds gained ground cautiously in early domestic trading with yields now down about 3bps at .93%. MBS are 6 ticks (.19) higher to start the day. No noticeable reaction to 8:30am econ data.
Today is Treasuries’ day to rally, apparently. 10yr yields are down 5.7bps to .903. MBS are up 7 ticks (just under a quarter of a point) to 103-05 (103.16). Fed Chair Powell is talking at a European banking conference and bonds seem to enjoy the tone, but it’s not the key driver. Key driver = timing and technicals.
MBS squeezed higher in less liquid late-day trading. Gains are still nowhere near those of Treasuries but 2.0 UMBS are nearly 3/8ths higher on the day. Meanwhile, 10yr yields are down 8bps at .88%.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
103-08 : +0-11
0.8830 : -0.1060
|Pricing as of 11/12/20 4:21PMEST|
Today’s Reprice Alerts and Updates
1:39PM : Best Levels of The Day. Treasuries Leading The Charge
8:40AM : Stronger Overnight; No Major Reaction to Data