Modest, Incidental Victory

Bonds closed with MBS in line with their best levels of the day, up an eighth of a point. 10yr yields fell just under 1bp to 4.264. 2yr yields did better, shedding just over 4bps and extending their gap vs 10yr yields to the widest levels since the volatile days in early April. The AM news cycle credited the news of Trump firing the Fed’s Lisa Cook for this “steepening” (a steeper slope between 2 and 10yr yields). Indeed, it may have contributed, but it’s debatable whether this level of movement in the curve actually matters.  2s vs 10s have been holding a tight range since April with few days falling outside a range of 0.45 to 0.57. In the bigger picture, bonds are still counting the hours until next Friday’s jobs report. 

Econ Data / Events

Durable Goods

-2.8 vs -4.0 f’cast, -9.3 prev

Core Durable Goods

1.1 vs 0.2 f’cast, -0.7 prev

CaseShiller 20 mm nsa (Jun)

0.0% vs — f’cast, 0.4% prev

FHFA Home Price Index m/m (Jun)

-0.2% vs 0% f’cast, -0.2% prev

FHFA Home Prices y/y (Jun)

2.6% vs — f’cast, 2.8% prev

Market Movement Recap

08:37 AM roughly unchanged overnight and mostly holding in early trading. MBS up 1 tick (.03) and 10yr up less than 1bp at 4.278

01:19 PM Strong 2yr auction but bonds were already gaining ground before that.  10yr now down 1.3bps at 4.259.  MBS up 3 ticks (.09)

05:23 PM Bonds closed with MBS in line with their best levels, up an eighth of a point.  10yr yields fell just under 1bp to 4.264.