In last week's defense, it really wasn't that noisy, but Friday's Jackson Hole speech and subsequent bond rally made it seem like big things were happening. In actuality, bonds were simply getting back in line with the prevailing range that was carved out after the last jobs report and we'll probably be waiting for the next jobs report before that range is meaningfully challenged. Between now and then, what do you do if you're the bond market? Answer: have days like today with minimal movement and highs/lows that were easily contained by Friday's range (what traders refer to as "an inside day").
moderately weaker overnight and little-changed so far. MBS down an eighth and 10yr up 2.9bps at 4.29
01:10 PM
mid day gains. MBS unchanged and 10yr up less than 1bp at 4.269
03:57 PM
Heading out at just slightly weaker levels. MBS down 2 ticks (.06) and 10yr yield up 2bps at 4.28
Lock / Float Considerations
The new week is underway with minimal change from last Friday. The calendar is on the lighter side in terms of potential volatility although lighter summertime trading conditions could result in seemingly random movement. The nearness to long-term rate lows means that risk-averse clients are still in lock mode. Risk-tolerant clients didn't see enough weakness to trigger any stop-losses on Monday, but those clients should be aware that odds are we'll be waiting until the early September jobs report before seeing any major rate momentum.
