It was an interesting juxtaposition to see a Fed spokesman talking about the tapering announcement back in September as bond yields hit the 3pm closing price, their lowest level since February. Headwinds are definitely there, whether it is to reduce risk or simply to sell such low returns at a time when the economy could soon point to an upswing. But there is still a tailwind because this proposal has yet to be made.

Economic data / events

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

  • ISM Manufacturing 59.5 vs 60.9 f’cast, 60.6 prev
    “Paid prices” have fallen the most since March 2020

Summary of the market movement

8:58 am

Slightly stronger to start after a relatively flat night session. Most of the wins were made in the first 90 minutes of the domestic session. MBS rises almost an eighth and 10 year return drops 1.4 basis points to 1.212%

10:21 am

Extra gains after weaker ISM data. 10 years down 4bps at 1.184 and MBS down 6 ticks (0.19).

1:22 pm

The rally shot into the noon hour with 10s bottoming at 1.151 (now down to 1.17%). MBS is trying to keep profits by just under a quarter point with 2.0 coupons.

3:26 pm

Just a little weaker since the last update, but 10 years still 4.4 basis points lower for the day at 1.182. MBS is still 5 ticks (0.16) higher on 102-06.