Today marked one of only 4 days of the year with an updated Fed dot plot. When it came out, there was a fairly pitiful volume response relative to other dot plot days and an even more underwhelming level of volatility in the bond market. It wasn't until almost 45 minutes later that bonds showed actual signs of life in response to Fed Chair Powell saying flat-out that they'll be able to make a better decision if they wait a couple of months. But even after that modest bounce in bond yields, we were just barely getting back to unchanged levels on the day. Bottom line, the Fed easily threaded the needle of bond market apathy--not too surprising given that it's a wide eye at the moment, but definitely not a given on dot plot day.
Modestly stronger overnight and little-changed after econ data. MBS up 2 ticks (.06) and 10yr down 1.8bps at 4.366
11:21 AM
Slightly friendly lead-off ahead of Fed. MBS up 6 ticks (.19) and 10yr down 3.3bps at 4.351
02:15 PM
Almost no reaction to Fed so far. MBS up an eighth and 10yr down 1.5bps at 4.369
03:22 PM
A bit of weakness during press conference, but leveling off now. MBS still up 1 tick (.03) and 10yr up less than 1bp at 4.386
Lock / Float Considerations
Fed day was the apex of calendar event risk for rates this week. Bonds are closed on Thursday, and Friday will be a low volume, illiquid wild card of a day. Risk/reward is fairly well balanced here as Treasuries, MBS, and mortgage rates all remain rangebound until they're not anymore.
