Good morning on this best day of the week, Wednesday,
In anticipation of tomorrows ECB rate announcement (the first rate hike from Europe in a decade). Bonds are sliding sideways with upward pressure in yield. The ECB initially set expectations for a .25% hike but over the last few days, and under the auspices of higher inflation in Europe (no gas from Russia), the ECB may move more aggressively to a 50bps hike.
The ten-year continues to leak higher and is at 3.03 right now.
It will likely test 3.10 before it comes back to test 2.90. Mortgage bonds are outperforming Treasuries but they are caught in a similar range. If treasuries don’t pull themselves up, mortgage bonds may sink to meet them (the tend to travel/trade in kind). The news today is more bond friendly than not. Existing Home Sales were released, and they got crushed. Much lower than expectations.
Please remain safe and stay healthy, make today great!