Bonds managed to recover modestly after the initial yield spike in the morning hours, but nonetheless earned the honor of seeing the biggest week over week jump in 10yr yields since 1981 (note: some outlets are saying 2001 or 1987, but we're not seeing that, and it doesn't really matter. It was a rough week, is the point). Looked at as a 2 week time frame, and it was on par with many other recent examples of moderately brisk selling. That leaves the upcoming week and a half in a great position to let us know how freaked out we should be.
Losing ground despite softer PPI. MBS down more than a quarter point and 10yr up 6.4bps at 4.496
12:51 PM
Nice reversal off weaker levels. MBS now down only an eighth and 10yr up only 2.2bps at 4.45
02:35 PM
Fizzling sideways now. MBS down 7 ticks (.22) and 10yr up 6.7bps at 4.499
Lock / Float Considerations
The current rate environment is one in which is makes absolutely no sense to assume that what you see today will be available tomorrow. It's not the worst-ever example of such a dynamic, and this doesn't mean we're immune from a friendly bounce, but it does mean that the weakness we've seen this week does not entitle bonds to a bounce simply for technical reasons. Data is in the back seat as well, so motivations are especially hard to predict and prepare for.
