Bonds lost ground, but it was still kind of a win

Bonds lost ground, but it was still kind of a win

Fri, June 24, 2022, 4:28 PM

At the start of the day, the links flirted with the idea of ​​breaking into positive territory. We were hoping to see them just holding steady, especially after the weaker consumer sentiment data, but it wasn’t meant to be. After a brief rally in sentiment data, bond buyers are done for the day. Returns followed equities and oil higher (correlation not necessarily causation) in the afternoon. On the positive side, yields remained below the technical level of 3.13% and MBS stagnated with only an eighth of a point of weakness. All of the above is technically a win considering it still leaves us in much better shape than at the end of last week.

  • Consumer Sentiment 50.0 vs 50.2 f’cast, 50.2 prev
    Inflation expectations:
    1 year: 5.3 compared to 5.4 before
    5 years: 3.1 against 3.3 before

  • New home sales 696k vs 588k f’cast, 629k prev

09:39

Slightly weaker overnight on mixed economic data from the EU, but improving a bit during domestic trade. 10yr up just 0.4bps to 3.093 and MBS down just 3 ticks (0.09)

10:19

Initially stronger after lower consumer inflation expectations at 10am. Treasuries are trading choppy around unchanged levels. MBS lagging mainly due to illiquidity. 10y perfectly unchanged right now at 3.089 and MBS down 6 ticks (0.19) with the caveat that there is a 9 tick spread between buyers and sellers.

10:44 am

Quick burst of sales without any obvious motivation. Bonds at lowest levels now with 10yrs up 4bps at 3.13 and MBS down 3/8ths

1:03 p.m.

Enough aside after the sale mentioned in the last update. Off the lows with 10-year yields up 3.6 basis points at 3.124 and 4.5 UMBS down just under a quarter of a point.

16:21

The sideways drift to slightly lower continues for Treasuries with the 10 up 4.9 basis points at 3.138. MBS has been more stable, currently down just over an eighth at 99-27 (99.84). Notably, the 10 was below the 3.13% technical level at the CME’s close at 3 p.m.


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Garland K. Long