If bonds had continued to sell off today, it would have made the week slightly more interesting, but even then, we would still be well under the high yields seen last week. As it stands, the combination of this morning's economic data and an undetermined source of inspiration a short while later left bonds in modestly stronger territory, thus making for a very flat week in the bigger picture. This is neither bad nor good, and also not a huge surprise given the very light data calendar. There are bigger-ticket events in the week ahead, including a Fed announcement (just tuning in for the press conference), GDP (1st look at Q4), and PCE inflation.
Modestly stronger at the open, but slightly weaker after data. MBS down 1 tick (.03) and 10yr up half a bp at 4.647
10:48 AM
Bouncing back now. MBS up 3 ticks (.09) and 10yr down 1.3bps at 4.629
01:51 PM
Off the best levels, but still up an eighth in MBS and down 1.3bps in 10yr.
Lock / Float Considerations
As feared (or perhaps just a coincidence?), bonds weren't interested in extending last week's rally without any compelling motivation from economic data. This has been and will continue to be a limiting factor for any hope of a meaningful rate rally. There are no scheduled market movers on the horizon until the Jan 29th Fed Announcement (and more importantly, press conference).
