Corporate bonds

Fed Speakers and Corporate Bonds Keep Negative Momentum Intact

MBS Live Recap: Fed Speakers and Corporate Bonds Keep Negative Momentum Intact

Tue, April 19, 2022, 5:25 PM

Bonds entered the domestic session moderately weaker, following European markets (which themselves, incidentally, were following US markets from Thursday afternoon and yesterday). The majority of morning selling followed the CME opening at 8:20 am, suggesting traders showed up to sell regardless of data or events. The afternoon weakness was more easily attributable to corporate bond prices (especially just after 3pm ET). Nonetheless, Fed speakers received a lot of attention, mostly due to the hawkish tone of Evans of the Chicago Fed one day with higher bond yields and nothing else as obvious scapegoats for the move.

  • Buy MBS from the Fed 10 a.m., 11:30 a.m., 1 p.m.

  • Housing starts 1,793m vs 1,745m f’cast, 1,788m prev
    Building permit 1,873m vs 1,865m f’cast, 1,865m prev

08:31

Moderately lower overnight with additional selling as domestic trade begins. 10-year up 4.3 basis points to 2.899 and 4.0 UMBS down nearly 3/8 of a point to 99-23 (99.72).

11:20 a.m.

Nice little bounce as the EU session draws to a close. 10yr now up “just” 4 basis points to 2.895. MBS down “only” 6 ticks (.19).

2:34 p.m.

Midday gains evaporate as corporate deals start rolling. The 10s rise to 2.917% and the MBS falls again by 3/8ths.

5:13 p.m.

Another glut of selling pressure after the 3pm close. More than anything, it aligns itself with the “prices” of a few large corporate bonds. 10s at 2.94% and MBS down almost half a point at the 5 p.m. close.


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