Bonds Hold Morning Gains; No Reaction to Tariff Headlines
Thu, May 29 2025, 4:46 PM
MBS Recap
Bonds Hold Morning Gains; No Reaction to Tariff Headlines
MBS Recap Matthew Graham | 4:45 PM
Bonds Hold Morning Gains; No Reaction to Tariff Headlines
To be clear, markets reacted to tariff headlines yesterday evening when the news was that a court decision would block certain tariffs. But even before today's most relevant tariff headlines, markets had correctly sniffed out the outcome. In short, tariffs are back in effect pending further review by the court and even then, traders expect the administration to find ways around any attempted block. Bottom line, there was no reaction to today's headlines by the time they came out because markets traded the likelihood overnight. Tepid econ data and a well-received 7yr Treasury auction added mildly to the gains.
Slightly stronger after data. MBS are up 1 tick (.03) and 10yr yields are down just under 1 bp at 4.469.
12:31 PM
flat at stronger levels ahead of auction. MBS up 7 ticks (.22) and 10yr down almost 5bps at 4.43
04:14 PM
Drifting out sideways near strongest levels. MBS up 6 ticks (.16) and 10yr down 4.8bps at 4.432
Lock / Float Considerations
Rates have managed to find support at recent high yields after spending most of May moving decisively higher. Prevailing momentum is sideways in a fairly narrow range in the bigger picture. Month-end trading can cause random volatility on Friday. It continues to be the case that a truly worthwhile rate rally will require sharply weaker economic data, a consistent failure of tariff-driven inflation to materialize, and/or a legitimate reason to expect lower Treasury issuance.
