Bonds reverse after a weak open — the 10-year tagged 4.748% before finding buyers at the 4.75% ceiling, recovering to 4.711% with UMBS 5.5 up a tick, as attention turns to Wednesday’s FOMC Minutes.
Bonds opened Tuesday under pressure and then reversed. Ten-year yields tagged 4.748% before the open — the third consecutive session of Iran-driven oil pressure pushing yields higher — and then found buyers. By mid-morning the 10-year was back to 4.711%, marginally lower on the day, and UMBS 5.5 had recovered to 99.27 after trading as low as 99.08 at the lock desk open. That is a 19-tick round trip in under 90 minutes.
The level that stopped it matters more than the move. The 10-year has failed at three technical ceilings on its way up over the past ten months — 4.30%, 4.42%, and now 4.75% — and August has been mostly sideways just beneath that last one. This morning's recovery is value buying at a familiar line, not a change in the underlying trend. There is no fresh fundamental catalyst behind it. That cuts both ways for anyone floating: the ceiling is holding for now, but nothing about today's session says the ten-month drift toward higher yields has ended.
July Housing Starts and Building Permits printed at 8:30 Eastern. Single-family starts fell sharply as elevated rates kept buyers on the sidelines and builder confidence sits near multi-year lows, though permits — the forward-looking half of the report — held up better. Industrial Production followed at 9:15 and Pending Home Sales at 10:00. None of these are primary rate drivers, and today's tape is being set by the 4.75% technical level rather than the housing data.
The week's real event is Wednesday at 2:00 PM Eastern: the FOMC Meeting Minutes from the July committee. That is the first detailed look at how the committee discussed the path to rate cuts, and it is the release that can genuinely move rate expectations for the rest of August. A tone confirming a September lean could push yields back down toward last week's lows. A cautious read gives the long end room to challenge 4.75% again — and this time it might not hold.
For borrowers: the 30-year is at 6.73%, still better than the 6.80%-plus range that prevailed before last week's CPI and PPI prints. Today's stabilization is welcome but it is one morning of dip buying, not a trend. If you are floating, Wednesday afternoon is the moment that decides the rest of the month.
— David Burson, NetRate Mortgage