Another Day, Another Sell-Off

Another Day, Another Sell-Off

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Another Day, Another Sell-Off

34 Min, 15 Secs ago

Bonds may not have sold off in an overly excessive manner today, but they sold off nonetheless.  In other words, rates went higher.  The early culprits were twofold: a surprisingly hot Producer Price Index and some comments from Fed’s Mester on the prospect of a 50bp rate hike.  Then in the afternoon, Fed’s Bullard said similar stuff and went a step further, saying he wouldn’t rule anything out for the next meeting.  All this after Fed members spent the past 3 weeks sounding unified on “25bps is all we need.”  The sudden shift in tone spooked bonds a bit, but it’s still up to data to drive the decision.  Fed Funds Futures suggest we haven’t yet seen enough data to price in a 50bp hike.  The result is intraday volatility that gives way to moderate additional weakness.

    • Jobless Claims
      • 194 vs 200 f’cast, 195 prev
    • Core Producer Prices M/M
    • Philly Fed
      • -24.3 vs -7.4 f’cast, -8.9 prev
    • Housing Starts
      • 1.309m vs 1.360m f’cast, 1.371m prev
    • Fed’s Mester: 

08:56 AM

Flat overnight and weaker after data and Fed’s Mester.  10yr up 2.7bps at 3.832.  MBS down just under a quarter point.

09:44 AM

Additional selling momentum in Treasuries with 10yr up 5.6bps at 3.859.  MBS down just over a quarter point.

12:45 PM

Nice bounce back underway since 10am.  MBS down only 2 ticks (0.06).  10yr up only 3.5bps at 3.838 (down from 3.869).

03:09 PM

Some quick selling pressure after Bullard comments on 50bp hikes.  10yr up 5.2bps at 3.855. MBS down just over a quarter point.

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Ahmed mstfa

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