Prices

Slightly Weaker, But It Could Have Been Worse Bonds are heading out the door in only moderately weaker territory.  One of the day’s most notable developments was the fact that stronger trading levels prevailed in the AM hours despite stronger econ data, looming supply, and another day of Fed Chair Powell testimony.  It was really only after the poorly-received 10yr Treasury auction that things turned south for longer-term bonds.  Even then, 10yr yields rising only 1.1bps feels like a victory given the bearish inputs digested by the market.  Unfortunately, this silver lining simply shows the capacity for resilience.  Whether or not the resilience materializes depends almost entirely on Friday’s jobs report and next week’s CPI data.   Econ Data / Events ADP Employment 242k vs 200k f’cast, 119k prev Market Movement Recap 09:57 AM Roughly unchanged overnight, then stronger at the 8:20am CME open and 9:30am NYSE open.  MBS up almost a quarter point.  10yr down 6bps at 3.91% 10:35 AM 2-way trading after JOLTS and initial Powell comments.  Briefly weaker, but bouncing back.  MBS up 5 ticks (.16) and 10yr down 6bps at 3.91% still. 11:32 AM MBS back to weakest levels, roughly unchanged on the day, but down a quarter point from highs.  No standout motivations.  Just moderate volatility within the recent range. 01:05 PM More weakness after 10yr Treasury auction.  10yr up 1.1bps at 3.98.  MBS down 6 ticks (.19). 04:23 PM Sideways at weaker levels all afternoon.  MBS down 6 ticks (.19) and 10yr yields up 1.3bps at 3.983.