Compared to Oil, Yields Not Quite as Willing to Drop

Compared to Oil, Yields Not Quite as Willing to Drop While the moment-to-moment correlation between bond yields and oil prices remained almost perfectly intact today, yields were less willing to follow the bigger drops. In other words, if we benchmark bonds to oil price movement, they underperformed the drop in oil prices. $139 billion in Treasury auctions and defensive positioning ahead of Wednesday's Fed announcement likely both contributed to that underperformance. Bottom line: it's encouraging to see the willingness to follow oil, but we won't be able to see more unrestrained trading until after Wednesday afternoon. Econ Data / Events Core CapEx (Jun) 0.9% vs 0.8% f'cast, 1.6% prev Durable goods (Jun) 0.3% vs 2.5% f'cast, -4.5% prev Market Movement Recap 08:32 AM Stronger overnight with oil. MBS up 6 ticks (.19) and 10yr down 3.6bps at 4.646 10:28 AM Some volatility on war headlines, but still stronger. MBS up 5 ticks (.16) and 10yr down 2.9bps at 4.654 02:33 PM Fairly flat all day. MBS up 5 ticks (.16) and 10yr down 3.8bps at 4.645