The bond market began the day by doing its best impression of lover scorned, threatening self harm unless it gets some sort of validation from its former partner (aka, the Fed). At the same time, the bond market is realizing its former partner isn't in a position to offer that validation. The best we could have hoped for at the outset would be for some qualitative acknowledgement that the Fed is getting closer to considering leveling off. Failing that, we would need whoever was selling to ...
The bond market began the day by doing its best impression of lover scorned, threatening self harm unless it gets some sort of validation from its former partner (aka, the Fed). At the same time, the bond market is realizing its former partner isn't in a position to offer that validation. The best we could have hoped for at the outset would be for some qualitative acknowledgement that the Fed is getting closer to considering leveling off. Failing that, we would need whoever was selling to ...
At times in the QE era, the markets have rushed to adjust to a rapidly evolving understanding of the Fed's policy intentions. At other times, the Fed simply surprises the market with a new reality that can't possibly be priced in all at once. Nonetheless, the need to price it in is apparent. The result is a relentless series of rallies or sell-offs that seem to be overdone. They only begin to make sense when we step back to consider the bigger picture, and that bonds couldn't possibly go...
At times in the QE era, the markets have rushed to adjust to a rapidly evolving understanding of the Fed's policy intentions. At other times, the Fed simply surprises the market with a new reality that can't possibly be priced in all at once. Nonetheless, the need to price it in is apparent. The result is a relentless series of rallies or sell-offs that seem to be overdone. They only begin to make sense when we step back to consider the bigger picture, and that bonds couldn't possibly go...
Bonds rallied fairly sharply at the end of last week, largely in response to weaker economic data at home and abroad. In Friday's recap, we discussed today's baseline scenario being a pull-back to start the new week, with an eye on the three Treasury auctions and the Fed announcement all taking place by Wednesday afternoon. Early trading is reading right out of that playbook so far with a fairly classic range-bound bounce (these floor/ceiling levels are from several weeks ago after the ear...
Bonds rallied fairly sharply at the end of last week, largely in response to weaker economic data at home and abroad. In Friday's recap, we discussed today's baseline scenario being a pull-back to start the new week, with an eye on the three Treasury auctions and the Fed announcement all taking place by Wednesday afternoon. Early trading is reading right out of that playbook so far with a fairly classic range-bound bounce (these floor/ceiling levels are from several weeks ago after the ear...
Fed Speakers and Corporate Bonds Keep Negative Momentum Intact
Bonds came into the domestic session moderately weaker, following European markets (which, themselves, were incidentally following US markets from Thursday afternoon and yesterday). A majority of the selling in the morning hours followed the 8:20am CME open, suggesting traders showed up to sell regardless of data or events. Afternoon weakness was more readily attributable to corporate bon...
Fed Speakers and Corporate Bonds Keep Negative Momentum Intact
Bonds came into the domestic session moderately weaker, following European markets (which, themselves, were incidentally following US markets from Thursday afternoon and yesterday). A majority of the selling in the morning hours followed the 8:20am CME open, suggesting traders showed up to sell regardless of data or events. Afternoon weakness was more readily attributable to corporate bon...
Ten-year U.S. yields climbed through 2.75% for the first time since March 2019 as investors priced in the impact of the Federal Reserve’s tightening plan and accelerating inflation.
Ten-year U.S. yields climbed through 2.75% for the first time since March 2019 as investors priced in the impact of the Federal Reserve’s tightening plan and accelerating inflation.
It's an understatement to say that "all eyes are on the Fed" this Wednesday as the committee meets to decide whether to hike 75 vs 100bps, among other things. Those "other things" include an updated dot plot (Fed rate forecasts) and of course the Powell press conference half an hour after the announcement. Between now and then, the path of least resistance for bonds is to "sell the rumor" of an increasingly hawkish Fed with some hope to be held out for "buying the news." In the bigger p...
It's an understatement to say that "all eyes are on the Fed" this Wednesday as the committee meets to decide whether to hike 75 vs 100bps, among other things. Those "other things" include an updated dot plot (Fed rate forecasts) and of course the Powell press conference half an hour after the announcement. Between now and then, the path of least resistance for bonds is to "sell the rumor" of an increasingly hawkish Fed with some hope to be held out for "buying the news." In the bigger p...
July has been a month with a decidedly European flair for the US bond market. Sure, there's been plenty of inspiration from domestic inflation data and Fed policy, but much of the remaining momentum has come courtesy of Europe. In general, that's been a good thing as European recession concerns have pushed bond yields lower. Today is just another installment with 10s down 6bps to 2.745 and MBS starting out up more than eighth. As can faintly be seen in the chart above, 10yr yields may hav...
July has been a month with a decidedly European flair for the US bond market. Sure, there's been plenty of inspiration from domestic inflation data and Fed policy, but much of the remaining momentum has come courtesy of Europe. In general, that's been a good thing as European recession concerns have pushed bond yields lower. Today is just another installment with 10s down 6bps to 2.745 and MBS starting out up more than eighth. As can faintly be seen in the chart above, 10yr yields may hav...
Fed Finally Sticks to Script. Bonds Like It
Fed days have seen a series of increasingly hawkish adjustments since last September. This one is stands out as the first since then where the Fed has bowled right down the middle. Powell only helped the cause during the press conference. without another hawkish adjustment or warning from Powell in the press conference. The biggest turning point followed Powell's assertion that 75bp hikes are off the ta...
Fed Finally Sticks to Script. Bonds Like It
Fed days have seen a series of increasingly hawkish adjustments since last September. This one is stands out as the first since then where the Fed has bowled right down the middle. Powell only helped the cause during the press conference. without another hawkish adjustment or warning from Powell in the press conference. The biggest turning point followed Powell's assertion that 75bp hikes are off the ta...
