Early Strength Gives Way to Steady Selling

Early Strength Gives Way to Steady Selling Bonds started the day in fairly good shape with a rally at the open and a certain measure of defiance of another jump in fuel prices. The defiance quickly gave way to underperformance--a fact that suggests short-term tradeflow considerations for the bond market or perhaps that we're simply putting the trading day under too much of a microscope. Either way, both yields and oil prices were higher by the end of the day although the 10yr avoided breaking above last week's highs. Market Movement Recap 08:30 AM Roughly unchanged after overnight volatility. MBS unchanged and 10yr up 0.2bps at 4.79 10:37 AM MBS now down 2 ticks (.06) and 10yr up 0.1bp at 4.789 02:52 PM MBS down 5 ticks (.16) and 10yr up 2.3bps at 4.811