Today's Weakness Mostly War-Related With Small Boost From Fed
2 Hours, 19 Min ago
MBS Recap
Today's Weakness Mostly War-Related With Small Boost From Fed
MBS Recap Matthew Graham | 4:40 PM
Today's Weakness Mostly War-Related With Small Boost From Fed
Because today was was a "Fed day" and because bonds hit their weakest levels of the day after the Fed announcement, we may look back on the selling and blame the Fed. In actuality, the Fed was only a small piece of the puzzle. Specifically, 10yr yields had already moved up from 4.34+ to 4.40 before the Fed announcement. At the 3pm CME close, there was only 1 more basis point of selling (4.41). The overnight/morning weakness was already covered in the morning commentary, but as a reminder, it had to do with the potential for a longer-term blockade of The Strait of Hormuz. There were no major issues with the Fed, but the market didn't like the fact that 3 dissenting voters preferred to abandon the vague reference to future rate cuts via the "additional adjustments" verbiage.
weaker overnight and modest additional selling after 830am data. MBS down 3 ticks (.09) and 10yr up 2bps at 4.369
10:07 AM
MBS down 10 ticks (.31) and 10yr up 5.3bps at 4.402
12:01 PM
Some volatility in response to news that the US is considering renewed strikes in Iran, but losses have been erased since then. MBS still down about 30bps and 10yr up 5bps at 4.398
02:16 PM
Slightly weaker after Fed announcement. MBS down 14 ticks (.44) and 10yr up 5.8bps at 4.406
02:53 PM
Weakest levels. MBS down nearly half a point. 10yr up 7bps at 4.42
Lock / Float Considerations
4/29/26 - Absence of overhead support from the range argues in favor of a defensive stance until further notice. Market pain associated with the Iran war should eventually be self-limiting (i.e. oil goes high enough to crush the economy and bond yields rise enough to bring in value buyers), but there's no telling exactly where that inflection point will be.
