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Market Commentary

Market Commentary

Today's Market Commentary

Friday, May 17, 2013

10-year notes 98-20+ (-5)
FN 3% Coupon 102-31 (-11)
Support 1.99%
Resistance 1.85%

U. of Michigan Confidence will be out at 9:55 EST (77.9 expected) and Leading Indicators will be out at 10:00 AM EST (+0.2% expected).

The overnight session was very quiet. The Yen traded rangebound and rates moved around 2 bps or less. One positive note: European Car Sales were up 1.8% (the first rise in 19 months). In the US, rates are selling off slightly this morning as 10-year notes are down 5 tics and the curve is a couple bps steeper. As we discussed yesterday, MBS had a solid start to the day but as the rates market continued its rally they lost some steam and ended the day a few tics wider vs. duration hedges. This underperformance has carried over to today on the back of heavier than usual origination and more Fed comments last night about "tapering".

At 11:00 AM EST there is a $5.5 billion UST buyback in the 2/18-2/19 sector and at 1:45 PM EST the Fed's Kocherlakota speaks.

*Support is the yield level at which demand is thought to be strong enough to prevent the yield from rising further.

**Resistance is the yield level at which selling is thought to be strong enough to prevent the yield from falling further.


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