Bonds lost ground at a modest to moderate clip on Friday, but not for any interesting or obvious reasons. The selling has been very linear over the past 2 trading days with Treasury yields fitting neatly inside a simple trend channel. There is perhaps some small case to be made for excess weakness in European bonds spilling over the a US bond market that has nothing better to do and no compelling motivations of its own. In the bigger picture, anything that takes place between 10yr yields of 4.34 and 4.50 would be considered very range-bound and that range might not be meaningfully challenged until the first week or two of June.
Modestly weaker overnight with 10yr up 2.3bps at 4.40 and MBS down 2 ticks in 6.0 coupons
12:48 PM
weakest levels of the day with MBS down 6 ticks (.19) and 10yr yield up 3.6bps at 4.413.
03:09 PM
Just a bit more weakness, but flatting out now. MBS down just under a quarter point and 10yr up 4.3bps at 4.42
Lock / Float Considerations
Friday's moderate weakness confirms the range bound resistance that we first entertained on Wednesday afternoon. This is the most boring outcome for the week and one with the fewest implications for the outlook. Anything between 4.34 and 4.50 in 10yr yields is well within the broader sideways range. Risk-tolerant clients could use the range to make lock/float decisions in the coming week, but bigger movement arguably waits for the first week or two of June.