MBS RECAP: Bonds Successfully Run Gauntlet of Big Ticket Events


Posted To: MBS Commentary

There was a lot that could have gone wrong for the bond market today, given the confluence of big-ticket events (Powell testimony, 10yr auction, Fed minutes, technical momentum shifts). Not only did bonds run that gauntlet with minimal damage, they were able to bounce back from some significant weakness in the overnight session. The losses began primarily during European market hours with a slew of stronger than expected economic reports and weaker bond auctions to blame. Naturally, European bonds bore the brunt of that weakness, but it was more than enough for 10yr yields to move decisively up and out of the recent 1.97-2.07 range. Powell's prepared remarks offered the day's first major salvation . They fully acknowledged a shift in the Fed's perceived risks and likely course of…(read more)

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