There's not much to say about today's trading session. MBS and Treasuries both ended exactly in line with yesterday's latest levels, and there wasn't much fanfare in between. Well, maybe "fanfare" depends on one's perspective. 10yr yields managed to fall 6bps by 9:30am and pushed 6bps higher over the next 3.5 hours before flat-lining in the afternoon. A 6bp swing is somewhat interesting, but even if we only had the flat-line, today would still be a victory due to yesterday's gains and the fact that bonds haven't been bothered by the moderate recovery in stocks. Granted, today's stock market bounce occurred at the same time as the bond yield bounce, but the correlation didn't even make it through the day before breaking down again.
No major reaction to ho hum data after overnight gains. MBS up 5 ticks (.16) and 10yr down 3.9bps at 4.195
11:37 AM
MBS up 2 ticks (.06) and 10yr down half a bp at 4.228.
03:10 PM
sideways at weaker levels. MBS up 1 tick (.03) and 10yr up 0.2bps at 4.236
Lock / Float Considerations
Bonds/rates have generally been in consolidation mode after hitting the best levels in early March. That's been mostly a sideways affair, but a breakout in either direction is possible. While there was a risk of a breakout associated with the Fed announcement, (and while rates technically broke out to the downside), it's easier to make a case that the consolidation pattern now merely shifts to a trading range (less of a triangle and more like a rectangle). This has limited relevance for locking/floating, but it does give the risk-tolerant crowd some more room to maneuver before hitting stop-loss ceilings. The risk-averse crowd is happy to lock the lowest rates in over a week and nearly the lowest rates in several months.
