Rates Testing Ceilings After Bond Auction and European Weakness
Wed, Feb 21 2024, 4:57 PM
Bonds managed to start the day in modestly stronger territory, but it’s just as fair to say “sideways.” Things didn’t start moving until after 10am when European bond market weakness spilled over to Treasuries. Yields drifted several bps higher into the 20yr bond auction and popped to the highs of the day after the lackluster auction results came out. The 4.32+ ceiling remained intact despite a bit of volatility surrounding the release of what was a mostly uneventful reading of the Fed Minutes. If the proof is in the pudding, consider that Treasury volumes were much higher after the auction than the Fed minutes, and the latter only caused about 1bp of movement. Translation: the Fed Minutes contained no surprises.
09:57 AM
Modestly stronger overnight despite weakness in EU bond market. 10yr down half a bp at 4.27. MBS up 2 ticks (.06).
12:06 PM
2 mini waves of selling into the PM hours. MBS down 5 ticks (.16) and 10yr up 2.8bps at 4.303.
01:07 PM
Sloppy 20yr auction. 10yr up 4.8bps at 4.323. MBS down a quarter point.
02:49 PM
Sideways after Fed minutes, but losing some more ground into 3pm close. 10yr up 5.4bps ta 4.329. MBS down 9 ticks (.28).
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