Small Scale Volatility Against Bigger-Picture Holding Pattern


Tue, Jan 24 2023, 3:53 PM

Bonds took several opportunities to react to econ reports that don’t typically merit much of a reaction today.  We saw similar behavior early in January and it made good sense in a time where markets are extra hungry for every tidbit of economic guidance.  After all, everyone is waiting to see if inflation is really defeated and how soft the landing might be from the Fed’s inflation fighting efforts.  Buyers were ultimately ready to buy as soon as data-driven selling pushed yields back to yesterday’s highs.  A strong 2yr Treasury auction added emphasis to the move, but despite the apparent intraday volatility, yields remain well within the prevailing range.

    • Philly Fed Services Index
      • -6.5 vs -12.8 prev
      • New Orders 10.8 vs -2.1 prev
      • Employment 16.5 vs 5.4 prev
    • S&P Global Services PMI
      • 46.6 vs 45.0 f’cast, 44.7 prev
    • S&P Global Manufacturing PMI
      • 46.8 vs 46.0 f’cast, 46.2 prev

09:54 AM

Some weakness after 8:30am data and additional weakness after PMI data at 945am.  MBS down an eighth and 10yr up 2.9bps at 3.549.

11:03 AM

Rallying since 10am.  Richmond Fed data and ECB newswires coincided with the rally, but don’t necessarily explain it.  10yr down 3.5bps at 3.484.  MBS up 2 ticks (0.06). 

01:40 PM

Best levels of the day in Treasuries with 10yr down 5.7bps at 3.464.  MBS up nearly a quarter point

03:50 PM

New lows for 10yr yields, down 6.3bps at 3.458.  MBS near highs, up a quarter point in steady, surprisingly liquid trading considering the time of day.


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