Not only have bonds managed to pull off a feat rarely seen in recent memory (back to back days of solid gains), but the total drop in yields is the biggest since August 2024. Today's improvement wasn't nearly as big as yesterday's CPI-driven rally, but it would have been very strange if it had been. The data and events on tap didn't have the street cred to drive such craziness. Modestly weaker retail sales helped yields level off after overnight weakness, but comments from Fed's Waller and Treasury Secretary nominee Bessent accounted for most of the day's downward movement in yields.
Slightly weaker overnight with a bit of a recovery after the data. MBS down only 1 tick (.03) and 10yr up 1.8bps at 4.671
11:53 AM
Additional gains after Waller comments and Bessent confirmation comments. 10yr down 4.2bps at 4.611. MBS up a quarter point.
02:57 PM
MBS up 6 ticks (.19) and 10yr down 4.4bps at 4.608
Lock / Float Considerations
As of Thursday, bonds have enjoyed a solid 2-day improvement. Most--if not all--of that was driven by tangible data and events, but there is some question as to whether momentum and position squaring made for bigger gains than we otherwise might have seen. Risk-averse clients would defend against that risk in the same old way. Risk tolerant clients now have some more room to set lock triggers at recent overhead rates.
