Unfriendly Breakout Driven by Data

Unfriendly Breakout Driven by Data

By: Matthew Graham

Wed, Mar 1 2023, 5:04 PM

Unfriendly Breakout Driven by Data

Bond yields had been pushing up against 3.98% (10yr Treasury) for the past 4 days.  Granted, today’s 3pm close only saw an increase to 3.99%, but any breakout is a bad breakout when we’re looking for signs of resilience.  Unfortunately, a true correction was and is only possible when and if economic data says so.  In today’s case, economic data at home and abroad suggested caution when it comes to hoping for such a correction.  EU inflation stayed hot and ISM Manufacturing Prices rose by much more than expected.  Ultimately, these are lower tier market movers relative to the big-ticket reports coming up in the next 2 weeks.  If those big-ticket reports tell another story, rates could just as easily move in the other direction.

    • ISM Manufacturing 
      • 47.7 vs 48.0 f’cast, 47.4 prev
    • ISM Prices Paid
      • 51.3 vs 44.5 f’cast

09:07 AM

Slightly weaker overnight.  Month-end/new-month tradeflows and EU inflation data.  10yr up 2.7bps at 3.955.  MBS down 6 ticks (.19).

10:24 AM

Additional weakness after ISM data.  10yr up 6.5 bps at 3.993.  MBS down 3/8ths.

01:20 PM

After a brief recovery, bonds are back in line with levels from the previous update (10yr at 3.99+ and MBS down about 3/8ths)

04:59 PM

Generally sideways all day after hitting the weakest levels just after 10am.  10yr going out the door at 3.998 and MBS still down 3/8ths. 

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Source: mortgagenewsdaily.com