Consolidation of rates running out of space

Consolidation of rates running out of space

1 hour, 8 minutes ago

While 10-year yields were willing to temporarily test a break above the 2.91% high yesterday, they barely came close to that level today, and that was in the overnight session to boot! The closest technical level underfoot was 2.84%, which saw plenty of action in the morning hours, but never a viable breakout attempt. If it’s 2022 and bonds are unable to break through at least one of our “key levels” one day with reasonably relevant economic data and Fed commentary, this is indicative of an extreme sense of indecision. and/or an absence of directional dynamics. The best argument we can make for a bigger move in the week ahead is the fact that yields will be forced to break out of their current consolidation pattern in the coming trading days.

    • Unemployment benefit claims
      • 250k v 265k f’broadcast, 252k prev
    • Philadelphia Fed Index
      • 6.2 vs -5.0 f’cast, -12.3 prev

08:52

Moderately stronger overnight, but giving up gains after Philly Fed surprised on the upside. 10y down 2bps to 2.884 but up from 2.835 lows. MBS up just 2 ticks (0.06) after rising more than a quarter point earlier.

09:36

Resilient before exceeding 2.9% (10 years). Now making gains as Fed’s Daly offers hints of a softer Fed policy path. 10y down 5.8 basis points to 2.842 and MBS up a quarter point to 99-14 (99.44).

3:31 p.m.

The best levels hit just after 11am, gradually selling off since then and now stabilizing sideways at slightly higher levels. MBS up 2 ticks (0.06) on the day and 10-year yields down 2.4 basis points to 2.879.


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