Volatile Day Thanks to Central Banks And, Eventually Oil

Volatile Day Thanks to Central Banks And, Eventually Oil Bonds took a break from their lock-step tango with oil prices for most of today's session instead focusing on European Central Bank (ECB) policy news. Key considerations included a sharply higher inflation forecast, warnings of additional upside risks, and a repricing of rate hike (not cut) expectations for 2026. Combined with yesterday's bad reaction to the Fed, the front end of the yield curve got hit hard--especially in the morning--and the pain radiated outward from there. During the selling spree, oil prices were staying well behaved. It wasn't until the end of the day that geopolitical headlines helped oil prices drop sharply, bringing bond yields along for the ride. Econ Data / Events Continued Claims (Mar)/07 1,857K vs 1850K f'cast, 1850K prev Jobless Claims (Mar)/14 205K vs 215K f'cast, 213K prev Philly Fed Business Index (Mar) 18.1 vs 10 f'cast, 16.3 prev Philly Fed Prices Paid (Mar) 44.70 vs -- f'cast, 38.90 prev Market Movement Recap 08:20 AM moderately weaker overnight. with most of the losses seen in the last 2 hours. MBS down a quarter point and 10yr up 4.7bps at 4.308. 2yr yield is up twice as much as market reacts to Fed day 10:17 AM Back to unchanged in MBS and up half a bp in 10yr at 4.267 02:41 PM Off best levels. MBS down 6 ticks (.09) and 10yr up 2.3bps at 4.284 03:08 PM MBS back to unchanged and 10yr now down 1.8bps at 4.245 on headlines suggesting Strait of Hormuz could reopen.