Big Bad Econ Data and Big ECB News = Big Victory For Bonds


47 Min, 35 Secs ago

Bonds shrugged off a 50bp hike from the European Central Bank (ECB) to focus on the unveiling of a new bond buying program (TPI) as well as an exceptionally weak Philly Fed Index.  Along with a disconcertingly linear of higher jobless claims and a gigantic block trade on the CME, the AM events sparked a sharp rally into the 11am hour.  US yields cooled off when EU markets closed but found their second wind heading into the close.  10s are heading out the door more than 13bps lower, under the recently firm 2.90% floor, and MBS are up roughly 5/8ths of a point in the final hour.

  • ECB hikes rates 50bps 

  • Philly Fed -12.3 vs 0.0 f’cast, -3.3 prev 
    (Weak internal components across the board)

  • Jobless Claims up to 251k vs 240k f’cast, 244k prev

08:48 AM

Bonds lost some ground at 8:15 following the ECB announcement, but bounced back after weaker econ data at 8:30am.  10yr yields are up less than 1bp at 3.038.  MSB are down only 1 tick (.03).

10:35 AM

Big gains after ECB Pres Lagarde talked about a new bond buying program being able to “go big” if needed.  EU bonds and US yields surging lower.  10yr down almost 10bps at 2.936.  MBS up almost 3/8ths of a point.

03:06 PM

Rally continues with 10yr yields near the best levels of the day, down 11bps at 2.921.  UMBS 4.5 coupons are up nearly half a point at 100-12 (100.375)

04:15 PM

Late day, lighter volume/liquidity short squeeze going on in bonds.  10yr down 14bps at 2.889 and MBS up 5/8ths of a point.


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