Ultimately an Uneventful Week Despite Micro-Volatility
Fri, Jun 21 2024, 4:41 PM
MBS Recap
Ultimately an Uneventful Week Despite Micro-Volatility
MBS Recap Matthew Graham | 4:40 PM
Ultimately an Uneventful Week Despite Micro-Volatility
This morning featured an overnight rally driven by weakness in European PMI data and a logical sell-off following much stronger PMI data in the U.S. Specifically, S&P Global's Services PMI rose to the highest level in more than 2 years. This is some of the earliest available data for the month of June and the burden of refutation is on incoming data that is week's away (for instance, next week's headline report, PCE, is still for the month of May). Today's selling never got out of hand, however, and that meant the week as a whole was wholly uneventful in the bigger picture.
Moderate overnight gains, following Europe. 10yr down 4bps at 4.22. MBS up 3 ticks (.09).
10:43 AM
Weaker after PMI data with 10yr now up 1.2bps. MBS down 2 ticks (.06).
12:45 PM
Sideways to slightly stronger after AM sell-off. MBS unchanged. 10yr down 0.3bps at 4.258
04:37 PM
Low volatility afternoon. MBS up 1 tick (.03). 10yr down 0.4bps at 4.256
Lock / Float Considerations
Heading into next week's Treasury auction cycle, and with Friday's PMI data alluding to potential strength in June's forthcoming reports, a risk-averse, lock-biased approach is the most obvious choice. This is further supported by the technical resistance seen near 4.20% in 10yr yields. In the big picture, however, there's renewed hope that a broad downtrend in rates is underway, pending confirmation from June's inflation and labor market data (still several weeks away).