Looking back, it’s 20/20 and it now seems clear that traders were actually sitting on their hands before the holiday weekend but otherwise would have bought more aggressively after Friday’s acceptably strong job report. Yesterday saw the first big spate of purchases (much of it before the weak ISM data). Today struck with rallies at 8:20 a.m. and 9:30 a.m. (the CME and Fed protocol at 2:00 p.m. was insignificant compared to this trade-driven rally. With that, both MBS and Treasuries are at their best levels out the door since February.

Summary of the market movement

8:21 am

Flat in Asia, then stronger in Europe, possibly inspired by weak industrial production data. Home Open gains continue with a 4+ bps decline from 10s to 1.311. UMBS 2.0 coupons have increased by 3 ticks (0.09) to 101-18 (101.56).

11:26 am

2 small jumps since opening. First a correction back towards the technical level of 1.35%, then another rally to new lows around 10.30am. 2. Recovery right now, which lifts yields from 1.296% to 1.325% (still 2.6 basis points lower on the day). UMBS 2.0 increased 3 ticks (0.09) at 101-18 (101.56).

1:31 pm

Traders sidelined before the Fed minutes (stocks, bonds, MBS, all lower in the last 90 minutes). 2.0 Coupons have lost more than an eighth, but are unchanged or slightly stronger on this day.

3:39 pm

Submissive afternoon at risk of post-Fed volatility now, but a fading memory. 10 years down 3.5 basis points at 1.316 and 2.0 UMBS down 3 ticks (0.09) at 101-18 (101.56).