Uneventful Conclusion to a Volatile Week

Bonds put in a decent day on Friday, ultimately getting back into positive territory and the best closing levels of the week.  Yields were almost perfectly in line with last Friday’s. Overall, most of the past 3 days have been uneventful, but Tuesday’s range breakout meant it was a volatile week overall. MBS and mortgage rates enjoyed ample insulation against that breakout thanks to recent outperformance driven by GSE MBS purchases (both actual and anticipated). The Fed is on deck next week, but with a zero percent chance of a rate cut. True big ticket data won’t return until the week after next.

Econ Data / Events

S&P Global Composite PMI (Jan)

52.8 vs — f’cast, 52.7 prev

S&P Global Manuf. PMI (Jan)

51.9 vs 52 f’cast, 51.8 prev

S&P Global Services PMI (Jan)

52.5 vs 52.8 f’cast, 52.5 prev

Consumer Sentiment (Jan)

56.4 vs 54.0 f’cast, 52.9 prev

Sentiment: 1y Inflation (Jan)

4.0% vs 4.2% f’cast, 4.2% prev

Sentiment: 5y Inflation (Jan)

3.3% vs 3.4% f’cast, 3.2% prev

U Mich conditions (Jan)

55.4 vs 52.4 f’cast, 50.4 prev

Market Movement Recap

09:27 AM Modestly stronger overnight, but gains erased at the open. MBS down 1 tick (.03) and 10yr up about half a bp at 4.248

11:29 AM Still mostly sideways.  MBS unchanged and 10yr basically unchanged (up 0.3bps) at 4.245

01:09 PM Near weakest levels with MBS down 2 ticks (.06) and 10yr up 1.6bps at 4.258

03:05 PM Back and forth volatility over the past hour but now back in positive territory. MBS up 1 tick (.03) and 10yr down half a bp at 4.237