There were no economic reports on tap today and no obvious market moving headlines during the domestic session. The lighter volume and liquidity made the bond market more susceptible to random sources of inspiration in the overnight session. Political developments in Japan were thus able to have a larger impact than normal and, in this case, that impact was unfavorable for bonds. That said, the selling was ultimately moderate. Larger scale momentum requires an end to the shutdown (thus allowing things like the jobs report to be published).
weaker overnight with a modest recovery early. MBS down 1 tick (.03) and 10yr up 2.6bps at 4.143
03:03 PM
Gradually weaker and now at the weakest levels of the day. MBS down 6 ticks (.19) and 10yr up 4.6bps at 4.164
Lock / Float Considerations
Risk/reward surround the lock/float decision remains muted during the government shutdown. In terms of trends and outright levels, the modest rally to the lowest rates in more than 2 weeks presents a compelling lock opportunity for risk-averse clients. The risk tolerant crowd is still waiting to see when the jobs report comes out (as long as bonds don't lose too much ground between now and then).
