Another Hawkish Powell Press Conference Harshes Bonds’ Mellow

The Fed cut rates and ended QT.  Neither were surprises for markets and neither had an impact.  The press conference was hawkish, however, with Powell saying a December cut was far from a foregone conclusion.  This is very much counter to the market’s expectation that a December cut was a lock.  Fed Funds Futures tanked and yields surged about 8bps in the 10yr.  MBS lost about 3/8ths and negative reprices continue to roll in.  

Econ Data / Events

Case Shiller Home Prices-20 y/y (Aug)

1.6% vs 1.9% f’cast, 1.8% prev

CaseShiller 20 mm nsa (Aug)

-0.6% vs — f’cast, -0.3% prev

FHFA Home Price Index m/m (Aug)

0.4% vs 0.1% f’cast, -0.1% prev

FHFA Home Prices y/y (Aug)

2.3% vs — f’cast, 2.3% prev

CB Consumer Confidence (Oct)

94.6 vs 93.2 f’cast, 94.2 prev
Labor differential: 9.40 vs 7.80 prev

Market Movement Recap

10:26 AM modestly weaker overnight and holding steady so far.  MBS down 1 tick (.03) and 10yr up 1.6bps at 3.992

01:28 PM 10yr yields are up 2.9bps at 4.005 and MBS down 3 ticks  (.09)

01:41 PM MBS now down 5 ticks (.16) and 10yr up 3.5bps at 4.012