The day ends with something of a mixed message as Treasuries are still slightly weaker in 10 and 30yr maturities while 2-7yrs are stronger, along with MBS. All had begun the day in weaker territory and remained there for most of the session. The 10yr Treasury auction wasn’t that great and bond markets weakened as a result.
FOMC Minutes, however, took us in the opposite direction. Interestingly enough, the entirety of today’s movement–which is based on events typically considered to be big potential market movers–took place within yesterday’s range in 10yr yields. In other words, today’s FOMC-driven strength, traversed no more ground than yesterday’s “just because” rally.
MBS outperformed, and 4.0s are heading out in just slightly positive territory while 10yr Treasuries are still 1.25bps higher. The gist of the FOMC Minutes rally was the clarification that markets should focus more on the policy statement than the Fed Forecasts, and that the Fed was concerned that markets misconstrued the forecasts as being overly indicative of an earlier rate hike.