As we discussed yesterday, the strong mid-week rally suggested a good amount of short covering was behind the move.  This merely means traders who bet on rising rates were finally cashing in.  It doesn't mean there are lots of new buyers interested in owning Treasuries.  Today's weakness supports this narrative.  Traders are indeed hesitant to buy bonds until they have more clarity about the stimulus plan that the new administration will attempt to pass.  Biden is expected to offer additional details tonight after markets are closed, but the real question is whether or not the plan can get moderate democratic votes in the senate.  That may be the talk of the town tomorrow.

Econ Data / Events

Market Movement Recap

08:19 AM

Slightly weaker overnight.  The whole move happened in an instant (at 9:24pm ET) as bonds reacted to rumors about Biden's stimulus announcement today.  Total damage?  A whopping 1.3bps in 10yr yields.  MBS are starting the day down 3 ticks (.09).

12:44 PM

Very calm and very sideways so far.  European bonds making a case for gains, but US bonds shying away as they wait on tonight's stimulus details.  Stocks are flat as well.  Powell is speaking  currently, but no reaction so far.

01:42 PM

A bit of weakness during and after Powell's comments on rates and bond buying, but correlation is questionable.  European market close and corporate bond issuance could also be contributing.  10yr at highs of day +2.23bps at 1.114%.  UMBS 2.0 down 3 ticks (.09) at 102-28 (102.875).

02:59 PM

Additional weakness now with 10yr yields just inching to news highs after the 3pm CME close.  At this point, we're probably seeing traders moving into a defensive position ahead of Biden's 715pm stimulus plan unveiling.  MBS down 6 ticks (0.19) but not many negative reprices reported yet.