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2025-09-18 21:49:50
[US Treasury Yields Surge, Mortgage Market Undercurrents] ⑴ US 30-year MBS performance diverged, with higher-coupon bonds finding some respite as Treasury yields further jumped. The 10-year yield broke through its overnight high to 4.126%, approaching the mid-term Bollinger Band resistance of 4.151%. ⑵ A much-expected drop in initial jobless claims eased concerns about an unusual spike in data during last week's Labor Day holiday, pushing Treasury bonds to continue their post-Federal Reserve rate meeting sell-off. ⑶ The 2-year/10-year Treasury yield spread widened to 54.2 basis points from its opening level, with market expectations for a 25 basis point rate cut at each of the Fed's October and December meetings returning to Wednesday's opening level. ⑷ The Bank of England's continued policy stance and reduced long-term QT sales led to lower gilt futures and a steeper curve, exacerbating volatility in global bond markets. 5) 5% and 5.5% coupons were the most active in UMBS30 trading, with GNIIs prioritizing the October 5.5% and November 5% varieties, while the 6.5% coupon bucked the trend and rose by 1 basis point. 6) Treasury yields rose across the board by 3-6 basis points, with the 20-year and 30-year bonds leading the gains. The 10-year yield reached 4.122% and the 5-year yield was at 3.680%, continuing the curve steepening trend. 7) The VIX volatility index fell 0.5 points to 15.26, and the investment-grade CDX spread narrowed 0.4 basis points to 47.15 basis points. At least eight new investment-grade bond issuances were announced that day.
