Bonds Claw Back to ‘Unchanged’ After Weaker Start

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Bonds were quite a bit weaker in the overnight session.  According to the average media report, this was in response to Syria-related developments.  The “logic” was that because the US had launched missiles into Syria WITHOUT sparking military escalation with Russia, that the whole Syria situation would just calm down from here.  Again, you’re being asked to believe that the announcement of a US air strike in Syria implies deescalation of conflict in Syria. 

If you’re not quite on board with that, don’t worry, you’re not alone.  I’m right there with you, and while I would admit that Syria-related headlines have had some effects over the past week, there are certainly other things on the minds of bond traders.  

Overnight, the focus was on Europe at the open (European open at 3am).  A spike in German Bunds led US Treasury yields quickly higher.  That accounted for a bit more than half of the overnight weakness.  We can assume there had been some preemptive selling associated with today’s big corporate bond launches as well.

The 8:30am econ data (slightly stronger Retail Sales in this case) didn’t have a big initial impact, but was arguable net-positive for bonds due to the weaker core reading.  Bigger moves followed the 9:30am NYSE open, which has been a common occurrence in the past few sessions.  Further improvements came after the end of the European session–not a huge surprise considering Europe was a net-negative for bonds in the overnight session.  By the end of the day, 10yr Treasuries had nearly broken even and Fannie 3.5 MBS were up 1/32nd of a point.


MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

MBS

FNMA 3.5

99-28 : +0-01

Treasuries

10 YR

2.8285 : +0.0005

Pricing as of 4/16/18 5:19PMEST

Today’s Reprice Alerts and Updates

8:50AM  :  Bonds Take Stronger Retail Sales in Stride


MBS Live Chat Highlights

Timothy Baron  :  “I see the rare “Top of Australia” pattern has formed on the 10 yr 5-day chart.”

Matthew Graham  :  “RTRS – KAPLAN SAYS 10-YEAR YIELD AT 2.85 PCT PUTS LIMIT ON HOW HIGH FED CAN RAISE RATES”

Matthew Graham  :  “RTRS – KAPLAN SAYS HE DOES NOT SEE INFLATION RUNNING AWAY EVEN THOUGH WE WILL SEE WAGE PRESSURES”

Matthew Graham  :  “TRUMP TO NOMINATE ECONOMIST RICHARD CLARIDA AS FEDERAL RESERVE VICE CHAIRMAN”

Matthew Graham  :  “RTRS – FED’S KAPLAN SAYS VERY CONCERNED THAT FISCAL STIMULUS WILL TURN INTO A HEADWIND IN 3-5 YEARS”




Original Source