The Trend is Friendly For Now

A common financial market quip is that the “trend is your friend.”  We like to add the addendum: “until it’s not anymore.”  All we can know for sure is that bonds have shifted from range-bound to trending lower in yield over the past 3-4 days and today was just another confirmation of that shift.  What we can’t know is when the next show of resistance will happen and whether that will merely be a speed bump before additional gains, or a sign to circle the wagons and get sideways again.  Data wasn’t necessarily a huge factor in today’s improvement although it didn’t hurt. Bonds have an underlying vigor for other reasons, as evidenced by a solid 7yr Treasury auction today, despite yields being at the lowest levels in more than a month. Today’s video discusses some possible reasons for that. 

Econ Data / Events

Jobless Claims

236k vs 245k f’cast, 246k prev

Continued Claims

1974k vs 1950k f’cast, 1937k prev

GDP 

-0.5 vs -0.2 f’cast

Durable goods

16.4 vs 8.5 f’cast, -6.6 prev

Durables ex defense/aircraft 

1.7 vs 0.1 f’cast, -1.3 prev

Market Movement Recap

08:39 AM Bonds have moved just a hair weaker in response with MBS back to unchanged after being up 2 ticks (.06) and 10yr back to unchanged after being down just over 1bp at 4.283.

09:16 AM Quick reversal back into positive territory.  MBS up 4 ticks (.125) and 10yr down 2.4bps at 4.265

12:32 PM Best levels of the day ahead of 7yr auction.  MBS up 7 ticks (.22) and 10yr down 2.4bps at 4.265

03:21 PM Best levels of the day with MBS up 9 ticks (.28) and 10yr yields down 3.6bps at 4.252