To be fair to today’s presidential inauguration, it was never destined to be an exceptionally big market mover. Traders nonetheless had to prepare to move in either direction in the event Trump’s speech contained something revelatory.
It didn’t… at least not when it comes to actionable developments for bond traders. That, in itself, was a moderate motivation for bond buying and stock selling. Reason being: more than a few market participants have been waiting for more details on stimulus specifics, both today and at Trump’s most recent press conference, and those details have yet to come. In other words, fiscal stimulus is generally good for stocks and bad for bonds, so an absence of fiscal stimulus details has a mild, opposite effect.
After touching the highest yields of the year, 10yr Treasuries fell back to ‘unchanged’ by the close. Fannie 3.5s gained an eighth of a point and Ginnie 3.5s gained almost a quarter point thanks to reduced refi threat after the repeal of the FHA MIP cut (MBS are worth more when they’re less likely to be eroded by refinancing).
2.52% continues to be the new ceiling, and the thought of breaking technical ceilings continues to be terrifying, according to 2013’s precedent.