Sideways and Slightly Stronger

by Matthew Graham

Sideways and Slightly Stronger It was a rather uneventful day with bonds holding sideways in a relatively narrow range after a modest overnight improvement. Intraday correlation with oil prices was fairly poor in the 8-10am window, but generally well-behaved otherwise. Short-end rates (2yr and shorter) were slightly higher on the day, and experienced some earlier volatility surround Fed's Goolsbee's comments on inflation and the rate path. The biggest takeaway there was that the Fed is attempting to assess supply shock inflation versus demand-driven inflation with Goolsbee saying he's hearing reports and seeing some indications of the latter (which implies a higher Fed Funds Rate outlook). Market Movement Recap 09:27 AM MBS up an eighth. 10yr down 3.5bps at 4.958 12:19 PM MBS up 5 ticks (.16) and 10yr down 4.2bps at 4.951 02:10 PM MBS up an eighth (.125) and 10yr down 2.1bps at 4.97