This morning's commentary focused on a bond rally in response to an absence of heavy-handed specificity in Trump's initial salvo of executive orders--specifically with respect to trade policy. In not so many words, massive, immediate tariffs have been referred to agencies for research and comment. Bonds (via futures) rallied on the news yesterday and into the overnight session. Without any new sources of inspiration today, the overnight gains remained intact and volatility was generally absent.
Moderately stronger overnight with implied gains on Monday in Treasury futures. MBS up 6 ticks (.19) and 10yr down roughly 5bps at 4.577
01:32 PM
Roughly an eighth of a point below best levels. MBS still up 6 ticks (.19) and 10yr down 5bps at 4.577
03:43 PM
Calmly holding gains. MBS up a quarter point and 10yr down 6.2bps at 4.564
Lock / Float Considerations
Bonds made it through Inauguration Day and the holiday weekend with moderate gains and without any major drama from the first round of executive orders. This rally is more about relief than a sustained bullish impulse. Wait and see from here... Risk reward is now more neutral than it had been heading into last week, but bigger victories still require data (and it's a very light week for data).
