Decent Day Helps Legitimize Friday’s Gains

Any time we see a strong move on NFP Friday with a hint of “snowball buying,” it’s worth considering that momentum at the end of the week is getting a bit carried away.  At the very least, in those scenarios, we wouldn’t be surprised to see a bit of push back at the beginning of the following week.  Today was that beginning, and while there was arguably a small amount of push-back in the overnight session, it was quickly erased, and with minimal volatility to boot.  This helps legitimize the levels achieved last Friday–especially with Treasury auctions on deck and another high risk event in the form of the CPI data on Thursday.

Econ Data / Events

No significant econ data

Market Movement Recap

08:48 AM Mostly holding Friday’s gains with 10yr yields up less than 2 bps at 3.578 and MBS down only 1 tick (0.03)

11:10 AM Additional gains heading into the 11am hour with some help from a NY Fed survey release showing lower inflation and spending expectations.  10yr down 2.2 bps at 3.538 and MBS up 2 ticks (.06).

01:43 PM Very flat since late AM gains.  MBS up an eighth and 10yr down 3.2bps at 3.528.

03:21 PM Yields unable to break much below 3.51%, but not looking panicked.  Currently still down 3bps at 3.53%.  MBS down 2 ticks (.06) as indicated, but illiquidity accounts for at least an eighth of a point of the apparent weakness.