After some initial weakness brought 10-year yields down to yesterday’s highs, bonds managed to calm down enough to claim a small victory at the 3pm close. It’s a welcome change in light of the recent frenzy of sales, but that change had already happened yesterday. Today’s predominantly lateral tone is best seen as confirmation of yesterday’s stabilization. From there, the objective will be to determine whether this new consolidation is there to confirm the recent weakness or to take up arms against it. From a strategic standpoint, while there is a chance that this means the selling frenzy is over, we would still need to see a steeper drop and out of range this week to confirm that.

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

  • Unemployment claims 362 vs 335 f’cast, 351 previous

  • Q2 final GDP 6.6 vs 6.6 f’cast / prev

  • Chicago PMI 64.7 vs. 65.0 f’cast, previous 66.8

08:37

Consequently stronger to start the night session, then weaker during European hours. Yields up 1.5bp to 1.54% and MBS down almost an eighth – small-scale moves in recent context.

1:50 p.m.

Slow and steady gains throughout the day as the decompression of the recent frenzy of selling coincides with a modest buying bias among month-end / quarter-end trading needs. 10 years down 1bp to 1.515 and 2.5 MBS up almost an eighth of a point.

3:59 p.m.

An uneventful afternoon with bonds showing no impressive evidence of month-end trade impacts. The 10-year yields and MBS remain at the same levels as the last update.