Ever since Fed day, it seems the bond market only really knows how to move in one direction (and it's not the direction that most of us prefer, even if it's necessary to maintain order in the universe). The post-Fed correction is arguably necessary, but the question is whether it says anything about the future. Simply put: no. The next major move for rates has been and continues to be all about economic data. This correction has been a mild, temporary diversion--even if it continues for another week at the same pace.
Moderately weaker overnight, mostly in Europe. MBS down an eighth and 10yr up 3.7bps at 3.766
10:32 AM
More weakness after early recovery. MBS down 6 ticks (.19) and 10yr up 4.7bps at 3.776
01:21 PM
Slightly weaker after 5yr auction. 10yr up 5.2bps at 3.781. MBS down a quarter point
03:57 PM
Fresh lows for MBS, down 9 ticks (.28) on the day. 10yr up 5.7bps at 3.788
Lock / Float Considerations
After mixed signals on Tuesday, the post-Fed bond market correction remains intact (i.e. bad for rates). Risk averse clients are waiting for better evidence that the correction has run its course. Risk tolerant clients are rolling the dice on weak econ data over the next 2 days. Results could push rates in either direction, but the biggest movement is reserved for the jobs report next Friday.
