A lot has happened in the last 3 months – especially in terms of variables that could affect future Fed policy. This made any massive response to today’s Fed protocol too slow, but it’s always good to be prepared for some volatility when it comes to the Fed. Traders prepared to sell bonds before the 2pm release. When the logs proved to be as docile as they could have been, there was a quick switch back to yesterday afternoon’s trading range and that was it.

  • Fed MBS purchases 10 a.m., 11:30 a.m., 1 p.m.

  • Housing starts 1,534m vs. 1,600m f’cast, 1,643m prev
    Building permits 1,635m vs. 1,610m f’cast, 1,594m prev

09:00 a.m.

Slightly weaker overnight as Asian stocks rallied. EU meeting was more supportive. 10yr started and stays about 1bp higher (1,277). UMBS 2.0 less than an eighth.

1:57 p.m.

Bonds are losing ground on the way into the Fed minutes. MBS just over an eighth point weaker from intraday highs. 10-year gain of 2.6 basis points at 1.293%. Slow, steady, linear grind all morning with a little extra defense in the last 30 minutes.

2:42 pm

Two-way street to Fed Minutes, but it appears to be dissolving with moderate gains. This brings 10 year yields back to 1bp from “unchanged” and MBS prices rose 5bps (2 ticks) that day.

4:14 pm

Stick a fork in today’s session. It is finished. Levels may drift a little higher or lower (currently unchanged from the previous update) but the real finding is that the Fed minutes were irrelevant.