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Stronger Start, Weaker Finish, No Real Reason

Stronger Start, Weaker Finish, No Real Reason Bonds improved in the overnight session, but reversed course the moment that the US bond market hit the 8:20am CME open.  The selling wasn’t intense, but it was consistent from that point on.  10yr yields ultimate set new long term highs just over 4.56 and MBS lost an eighth to a quarter.  The most interesting market mover of the day was the complete absence of compelling market movers.  This fits the “repricing” narrative discussed in the morning commentary.  The silver lining is that the day-over-day losses were far smaller than those seen yesterday, but it’s too soon to conclude bonds are settling in for next week’s big ticket data. Econ Data / Events Case Shiller Home Prices y/y +0.1 vs -0.3 f’cast, -1.2 prev FHFA Home Prices y/y +4.6 vs 3.2 prev Market Movement Recap 09:24 AM Initially weaker in Asia, but stronger in Europe.  Giving back some overnight gains.  10yr down 1.4bps at 4.517 and MBS unchanged to a few ticks lower. 12:18 PM Selling continued into PM hours.  10yr now up 1.3bps at 4.544.  MBS down just over an eighth.  02:27 PM Treasuries continue to weakest levels with 10s up 2.9bps at 4.56.  MBS are down 3/8ths, but more than half of that weakness is due to illiquidity.

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