Sometimes, it's a shame that the 7yr Treasury isn't the most popular bond market benchmark. If it were, today's headline could reference "knockin' on 7's floor." Whether it's the 3.77 level in the 7yr Treasury yield or 4.0% in the 10yr, bonds are repeatedly approaching these "floor" levels over the past 2 weeks and today's installment was the best yet--even if only barely. Yet again, there's not much for the bond market to hang its hat on in terms of motivations this week if not for the general stock market malaise. Apart from that, one would have to venture a guess that bond traders are discounting economic fallout from trade/geopolitical uncertainty, but there's no objective way to measure those vibes in the short term.
Choppy and sideways overnight, but in a narrow range. MBS up 2 ticks (.06) and 10yr down 0.7bps at 4.039
01:10 PM
MBS up an eighth and 10yr down 2.6bps at 4.019
02:21 PM
MBS up 2 ticks (.06) and 10yr down 2.1bps at 4.024
03:52 PM
best levels of the day with MBS up an eighth and 10yr down 3.4bps at 4.01
Lock / Float Considerations
Bonds are mostly sideways near their strongest recent levels this week. Much like 3 weeks ago (when we said bonds would need convincing from econ data in order to improve very much), we'd similarly need to see some strong econ data to push rates meaningfully higher. In other words, we're a bit more insulated than we had been, but keep in mind that bonds can respond to non-econ-related events as well, provided they're big enough.
