Ugly Snowball Selling Thanks to Oil and Inflation Data
3 Hours, 12 Min ago
MBS Recap
Ugly Snowball Selling Thanks to Oil and Inflation Data
MBS Recap Matthew Graham | 4:36 PM
Ugly Snowball Selling Thanks to Oil and Inflation Data
MBS lost nearly a full point by 4pm ET and 10yr yields were up 11.4bps at 4.95%. This is the highest since October 2023 when 10s briefly hit 5.006%. At one point in the overnight session, yields were slightly LOWER on the day. Things changed in waves. First wave: oil prices surged overnight and had already broken $100 but the time PPI came out. Second wave: PPI was roughly in line with forecasts, but internal components suggested a 0.1 increase to core PCE inflation. The reaction was the sharpest of the day for bonds. Third wave: late day illiquid redistribution after 30yr bond auction (although this could also be incidental drift ahead of Friday's CPI data). If we could only focus on 2 things, it would be the acceleration in the fuel price trend and the unfriendly PCE implications in today's PPI data.
Much weaker on a combo of oil and PPI reaction. MBS down 5/8ths and 10yr up 8bps at 4.92
01:09 PM
MBS down 22 ticks (.69) and 10yr up 8bps at 4.92
03:39 PM
MBS down just over 7/8ths of a point and 10yr up 11.6bps at 4.957
Lock / Float Considerations
9/10/26 - As always, a highly defensive strategy is the only strategy when bonds are in snowball selling mode. Of course, heavy selling introduces the possibility of a big individual bounce at some point, but it's not something that can be reliably timed/predicted and there's never a guarantee that such bounces are lasting turning points.
