Data and Headlines Drive Modest Volatility Ahead of The Fed
Tue, Jul 30 2024, 4:06 PM
MBS Recap
Data and Headlines Drive Modest Volatility Ahead of The Fed
MBS Recap Matthew Graham | 4:06 PM
Data and Headlines Drive Modest Volatility Ahead of The Fed
There were two different bouts of modest volatility in the bond market today. The first followed the 10am JOLTS data as the stronger headline/revisions caused some initial selling. Buyers bounced back with help from softer internal components--both in JOLTS and via the labor differential in the Consumer Confidence data. Afternoon volatility followed headlines regarding a rocket attack in Beirut which left bonds sideways near their best levels of the day. The Fed announcement is the next major calendar event, but Wednesday AM data is still capable of causing some movement.
Unchanged overnight, stronger early, now back to unchanged after data. MBS down 1 tick (0.03). 10yr down 0.5bps at 4.17
01:04 PM
Quick surge in bonds on geopolitical headlines. 10yr down 3.4bps at 4.142. MBS up an eighth.
03:29 PM
Fairly flat after early afternoon gains. 10yr down 3.6bps at 4.141. MBS up an eighth.
Lock / Float Considerations
Friday's PCE victory helps set a range ceiling for now. It's all the way up at 4.29 in terms of 10yr yields, so it gives risk takers some room to play the range. As always, there's no way to know which way things will go this week--only that the stakes are higher. Volatility potential increases steadily into Friday's jobs report. Wednesday afternoon's Fed announcement is a bit of a wildcard--not because of the rate decision, but rather markets are looking for clues about September's meeting. If anything, there are unfriendly asymmetric risks due to the universal belief in a September cut. In other words, the Fed couldn't anything to make that cut more likely, but they could do something to raise some small questions.