UMBS losing another 48 big bps this morning.  S&P Futures down 26.75

Traders and analysts were all sitting in a circle and nodding their heads in approval as EU and US yields were flat to slightly lower around 4:20-4:30am ET.  Reuters had just published a piece titled “Bond sell-off takes breather.”  Less than an hour later, Bund yields had spiked to new long-term highs with Treasury yields in tow.

There were no obvious motivations or volume spikes to suggest any underlying inspiration beyond the same old “repricing” theme.   Say it with me now, Higher for longer.


Job Openings = 9.61m vs 8.8m f’cast   [8.92m prev]

“Quits” = 3.638 vs 3.549 prev (lower is better for rates)

JOLTS (job openings and labor turnover survey) was the week’s first massively important econ data and it is not good for bonds.  Fear of a number like 9.6m is the reason for yields backing up heading into this week.  The reality of 9.6m is worth a quick push back to opening highs

Home prices rose 0.68% in July, according to Black Knight. This pushed the annual growth rate to 3.8%. Rising home equity means there are opportunities in the cash-out refi market.

Cleveland Fed President Loretta Mester saidthat investors should expect one more rate hike this year.  Bowman is calling for 2 more.  Fed Vice Chair Barr said they are “likely at or very near” a level that is sufficiently restrictive.  Bostic has no urgency to raise again.  Kashkari thinks there will be more.

The Job Openings and Labor Turnover Survey (JOLTS) is not a report we paid much attention to as a market mover until the past year or two.  Since then, it has increasingly been mentioned by the Fed.  That alone is reason enough to pay attention, but it’s also able to teach investors things about the labor market that don’t show up as readily in other data. It had been trending lower (and arguably, still is), but as was the case in February and June, total job openings popped higher into a position where a subsequent increase would break the downtrend.  Bonds were nearly unchanged before the data, but sold off abruptly in its wake.  Both 10yr yields and mortgage rates hit new long-term highs.

UMBS ended the day down 63 bps.   Ending at 97.47 on the 6% coupon

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