Bonds lost ground modestly today with the ultimate damage being roughly an eighth of a point for MBS and less than a bp for 10yr yields. The selling was led by the short end of the curve (i.e. 2yr yields were up 1.5bps). There wasn't any obvious catalyst apart from an ongoing surge in fuel prices. Perhaps most notably, fuel futures peaked at the same time as bond yields and both declined together after that. We're also not bothered by the short end leading the selling considering how resoundingly it led the rally over the past 2 days. Bottom line: this feels like incidental consolidation after a solid 2-day rally and not something that's indicative of new momentum.
weaker overnight and no reaction to econ data. MBS down more than an eighth and 10yr up 3.5bps at 4.586
11:37 AM
Strongest levels. MBS down only an eight and 10yr up 2.2bps at 4.572
02:00 PM
MBS down 3 ticks (.09) and 10yr up 1.6bps at 4.566
Lock / Float Considerations
7/16/26 - Consolidation in bonds and mixed signals in technicals (still above 4.54% but supportive bounce at 4.59%) makes for a fairly neutral risk/reward outlook.
