**Bonds Defensive Amid Trump’s Call for Lower Rates**
Bonds in Turmoil Despite Trump’s Push for Lower Rates
Bonds faced a tumultuous day as they lost ground, even with slightly higher Jobless Claims. The market seemed to be on edge, anticipating the repercussions of upcoming fiscal changes. Speculations abound about how tariffs might drive inflation up or how separate policies could affect growth and revenue. Unfortunately, none of these scenarios bode well for interest rates. In a surprising turn of events, President Trump explicitly stated his intent to “demand” lower interest rates during his speech at Davos today. Despite this, the 2-year Treasury yields dipped, but not significantly enough to indicate a strong market reaction.
Jobless Claims
This morning’s Jobless Claims figures showed a notable increase, with 223k compared to the forecasted 220k and the previous 217k. Additionally, Continued Claims rose to 1899k, surpassing the forecasted 1860k and the previous 1853k.
Morning Market Trends
At 8:31 AM, the market experienced some weakness, with MBS down slightly and the 10-year Treasury yield rising by 2.3bps to 4.634.
Midday Market Shifts
By 1:52 PM, there was further weakness in the market, but it stabilized later in the day. MBS were down by 5 ticks (.16), and the 10-year yield increased by 3.7bps to 4.469.
End-of-Day Analysis
As the day drew to a close, the market remained relatively stable after the morning fluctuations. MBS were down by 6 ticks (.19), and the 10-year yield rose by 3.3bps to 4.645.
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