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MBS MID-DAY: Cautious but Meaningful Rally After ADP Data

Overnight trading deposited bond markets in just slightly better territory to start the domestic session.  Right off the bat, the ADP employment numbers had a positive effect on prices, but there was a strong push back from 8:30am to 9:00am for no overt reason.  Covert reasons abound, however, as traders increasingly show their hands regarding resistance around 2.47-2.48% in 10yr yields.


In other words, 10yr yields have continually shied away from breaking any lower than that, though MBS have increasingly outpeformed in the meantime.  Whereas 10’s are no lower than overnight lows, MBS are at their best levels since June.  The afternoon events could draw out some more conviction in Treasuries (meaning either a firmer bounce against recent yield floors or finally breaking them).