It would be hard to have any discussion about important technical levels in 10yr Treasury yields recently without 2.79-2.80% coming up early and often. This pivot point acted as a firm floor throughout March, finally giving way at the end of the month as trade war volatility worked its way through markets. Stocks recovered earlier this week and bonds tagged along, moving back up and over 2.80% as of Wednesday.
Bonds ended up abstaining from any serious trading yesterday, but managed to hang out close enough to 2.80% to make today interesting. Fortunately, it ended up being interesting in good way for rates/bonds/originators--even if only modestly.
Stocks started the overnight session losing ground on trade war rhetoric out of China. The losses were fairly well contained, but they were enough to help bonds start the day in slightly stronger territory. Most of the movement, however, followed the much-weaker-than-expected NFP number (103k vs 193k forecast).
At first, the NFP result was only good enough for 10yr yields to make the trip down to the 2.79-2.80 pivot point (but not to break through). Stocks opened slightly stronger and bonds were forced to regroup until the 10am hour. After stocks stalled, bonds felt they had the green light to make a more convincing run below 2.79%--this time, successfully. Yields kicked around in a sideways range between there and 2.77% through the close--a pretty impressive feat given the selling pressure that often creeps into view on the Friday afternoon before a Treasury auction week.
MBS, for their part, continue lagging the bigger moves seen in Treasuries. Whereas 10yr Treasuries gained half a point in PRICE, Fannie 3.5 MBS didn't even pick up a quarter of a point. Lenders adhered to that theme of diminishing returns as rate sheets didn't even improve by that much. But, at least they improved.