MBS RECAP: Bonds Scratch Out Modest Gains as Traders Book Profits

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Posted To: MBS Commentary

Bond traders can book profits on bond purchases by selling, or on bond sales by buying. Today was characterized by the latter. Logically, traders bet on higher rates on Wednesday afternoon and again on Thursday morning as Powell delivered a far less friendly message than the most recent Fed statement would suggest. Whereas the statement didn't mention lower global growth risks, unfriendly potential changes to the Fed's bond portfolio, and the fact that the cut of the Fed's IOER rate had nothing to do with an actual rate cut, Powell DID . As soon as he did, rates started moving higher at the quickest pace in more than 3 weeks. This morning's jobs report wasn't enough to keep the selling going–perhaps because tepid wage growth and a downtick in the hourly work-week didn't…(read more)

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