General Bond Trends
After this week’s huge and unexpected rally in bonds and rates, this morning’s negative reaction came as no surprise. What seemed to be fueling the rally was, for the most part, a very small part of Fed Chairman Powell’s afternoon speech. If we looked past the comment about slowing the pace of their rate hikes, nearly every other part of the speech can be labeled cautious. Traders were hoping to see one thing and they got it, causing the bond rally. Move forward a few days and a major economic release supports the rest of his cautious speech, it is not surprising at all that we are seeing a very negative morning in bonds and mortgage pricing.