Solid Start But Data Dependent
Mon, Jan 29 2024, 4:37 PM
Bonds started the day in slightly stronger territory with gains in both Asia and Europe overnight. The bulk of the domestic session was flat and uneventful until the 3pm Treasury refunding update. This isn’t the official announcement (that’s on Wednesday), but it offered a hint of what’s to come. Specifically, estimated borrowing needs dropped more than $50 billion for the quarter–not an insignificant amount. The bond market agreed with yields dropping immediately in response. 10s and MBS ended the day at the best levels in a week and a half. While that’s a nice little victory, where we go from here depends very much on the incoming econ data.
10:15 AM
Stronger overnight but bouncing now. 10yr still down 1.9bps at 4.12. MBS up 2 ticks (.06).
02:16 PM
Sideways all day with Treasuries outperforming modestly. MBS up an eighth. 10yr down 4.2bps at 4.097.
03:09 PM
Additional gains after TSY refunding notes. 10yr down 6.5bps at 4.047. MBS up just under a quarter point after adjusting for illiquidity.
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