Fed Minutes Push Yields Higher

As expected, the recent raft of hawkish Fed speakers foreshadowed (whether intentionally or coincidentally) a hawkish message in today’s Fed minutes. At issue: “many” meeting participants felt that a December cut would NOT likely be justified as opposed to “several” who disagreed. This was compounded by the fact that BLS rescheduled the early December jobs report for 12/16/25–6 days after the December Fed meeting. In other words, there won’t be any employment data that would help the Fed justify a cut next month. Fed Funds futures agreed with a spike in implied yields immediately following the BLS news. Longer-term bonds followed suit after the Fed Minutes. 

Econ Data / Events

ADP Weekly Payrolls 

-2.5k vs -11.25k prev

Jobless Claims (October 18th)

232k vs 223k f’cast, 219k prev

Factory Orders

1.4 vs 1.4 f’cast, -1.3 prev

Builder Confidence

38 vs 37 f’cast, 37 prev

Core Durable Goods (Aug)

0.4 vs 0.6 f’cast/prev

Market Movement Recap

10:02 AM Slightly stronger overnight, but losing ground since 9:30am NYSE open.  MBS unchanged and 10yr up 1.1bps at 4.12

11:01 AM Bouncing back from AM weakness.  MBS up 1 tick and 10yr up 0.9bps at 4.118

02:13 PM no reaction to Fed Minutes. MBS unchanged and 10yr down 0.4bps at 4.106

02:43 PM Weakest levels of the day for MBS, down 2 ticks (.06).  10yr up 1.3bps at 4.123

04:18 PM Heading out near weakest levels. MBS down 3 ticks (.09) and 10yr up 1.9bps at 4.128