MBS RECAP: Trade Fears Hitting Stocks; Stocks Try to Take it Out on Bonds


Posted To: MBS Commentary

Bonds showed both their hands early today. The first was seen in the overnight session when decent overseas buying demand pushed yields below the incredibly solid 2.80% floor. Sellers stepped in quickly and pushed yields back into weaker territory for the start of the domestic session. Bonds' second hand came out right after the Durable Goods data. The report was plenty strong enough to justify additional bond market weakness (+3.1 vs +1.5 forecast with a 1% beat in the important "cap-ex" numbers). But after only a few minutes of fairly halfhearted weakness, bonds bounced at the same ceiling seen yesterday afternoon. With a strong floor underfoot and well-represented ceiling overhead, 10yr yields trudged sideways for the rest of the session, apparently intent on making it to the…(read more)

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