Will September Deja Vu Continue?

Rates rallied hard into last September 2024's Fed rate cut and then bounced relentlessly higher.  With average rates up about a quarter point since Tuesday, the parallels are certainly there.  But Last year's spike didn't happen so abruptly on Fed day and the day after.  It required upbeat econ data to send rates screaming higher. In today's case, we had two separate upbeat reports. This was barely worth an eighth of a point of weakness in MBS and not even 3bps of weakness in 10yr yields, but on average, lenders are feeling defensive (when MBS prices were at the same levels 2 weeks ago, rates were almost 10bps lower). The good news is this: the deja vu is both coincidental and driven by objective developments. It's not on a pre-set course and it won't continue if incoming economic data is weak. The bad news is that if the incoming data is surprisingly strong, well... you know.