Fed Threads Needle of Apathy

Today marked one of only 4 days of the year with an updated Fed dot plot. When it came out, there was a fairly pitiful volume response relative to other dot plot days and an even more underwhelming level of volatility in the bond market. It wasn’t until almost 45 minutes later that bonds showed actual signs of life in response to Fed Chair Powell saying flat-out that they’ll be able to make a better decision if they wait a couple of months.  But even after that modest bounce in bond yields, we were just barely getting back to unchanged levels on the day.  Bottom line, the Fed easily threaded the needle of bond market apathy–not too surprising given that it’s a wide eye at the moment, but definitely not a given on dot plot day.

Econ Data / Events

Jobless Claims

245k vs 245k f’cast, 250k prev

Continued Claims

1945k vs 1940k f’cast, 1951k prev

Building Permits

1.393m vs 1.430m f’cast

Housing Starts

1.256m vs 1.36m f’cast

Market Movement Recap

09:28 AM Modestly stronger overnight and little-changed after econ data.  MBS up 2 ticks (.06) and 10yr down 1.8bps at 4.366

11:21 AM Slightly friendly lead-off ahead of Fed.  MBS up 6 ticks (.19) and 10yr down 3.3bps at 4.351

02:15 PM Almost no reaction to Fed so far.  MBS up an eighth and 10yr down 1.5bps at 4.369

03:22 PM A bit of weakness during press conference, but leveling off now.  MBS still up 1 tick (.03) and 10yr up less than 1bp at 4.386