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.
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
Lock / Float Considerations
Last week's CPI helped solidify the on-again, off-again downtrend in rates that began in May. The burden of proof is increasingly on bond bears and upbeat econ data. That is welcome news for risk-tolerant clients, but it's good to remember that there are always pockets of correction in any trend. The more we push long term lows, the more such risks make sense to consider. Beyond that, "data dependency" reigns supreme. In the shortest term, Tuesday's Retail Sales is likely the biggest risk of the week on the data front.