Daily Newsletter: Wednesday March 19, 2025

View our most recent newsletter below, or use the date selector to view past newsletters.

Post-Fed Rally is “Nice” But Not Quite Exciting

In a small vacuum, today’s Fed announcement had a noticeably positive impact on bonds despite yielding “just another day” vibes in the bigger picture. Traders reacted to some combination of a reasonably steady dot plot and the announcement of slower balance sheet shrinkage (which, in turn, implies more bond buying in the short term at the expense of a longer wait before the Fed fully reinvests its balance sheet proceeds). If you don’t understand that last part, don’t worry. It’s arcane. It is basically a technical adjustment in the pace, but not in the destination. The bottom line is that the adjustment was mildly friendly for bonds today, even if it was a technical adjustment and not an indication of easier monetary policy.

Market Movement Recap

10:34 AM Roughly unchanged overnight and slightly weaker in the past hour. MBS down an eighth and 10yr up 1.6bps at 4.302

01:00 PM Sideways since the last update. MBS down 3 ticks on the day and 10yr up 2.4bps at 4.311

02:25 PM Stronger after Fed announcement (greatly slowing the pace of Treasury tightening). MBS up 2 ticks (.06) and 10yr down 1.3bps at 4.274

03:41 PM Holding gains after Powell press conference. MBS up 5 ticks (.16) and 10yr down 3.4bps at 4.253