Peace Deal Rumors Make For Mid-Day Reversal

Peace Deal Rumors Make For Mid-Day Reversal Bonds started the day in fairly forgettable and slightly weaker fashion after overnight headlines suggested that the disposition of Iran's nuclear material remains a sticking point. Bonds were flat at weaker levels all morning. Then, just after 1pm, a different headline suggested a "draft agreement" was expected to be announced in a matter of hours. It listed several bullet points, but ironically, nuclear material was not on the list. Nonetheless, the bond market rallied into positive territory rather easily. As much of a head-scratcher as that is (why get excited if the nuclear sticking point remains?), there's no question about the reaction function with oil prices perfectly matching the bond yield move. Econ Data / Events Building Permits (Apr) 1.442M vs 1.39M f'cast, 1.363M prev Continued Claims (May)/09 1,782K vs 1790K f'cast, 1782K prev Housing starts number mm (Apr) 1.465M vs 1.41M f'cast, 1.502M prev Jobless Claims (May)/16 209K vs 210K f'cast, 211K prev Philly Fed Business Index (May) -0.4 vs 18 f'cast, 26.7 prev Philly Fed Prices Paid (May) 47.90 vs -- f'cast, 59.30 prev Market Movement Recap 08:31 AM Weaker overnight as Iran says it's keeping nuclear material. MBS down a quarter point and 10yr up 3.2bps at 4.62 12:26 PM Fairly flat at modestly weaker levels. MBS down 3 ticks (.09) and 10yr up 1bp at 4.598 01:17 PM Rallying on Iran peace agreement rumors. MBS up 3 ticks (.09) and 10yr down 1.4bps at 4.575 02:29 PM Rally continues on peace deal news. MBS up more than a quarter point and 10yr down 3.2bps at 4.556 02:59 PM most recent newswires pushing back on previous, optimistic news. 10yr back near unchanged levels at 4.585 and MBS up an eighth (after being up more than a quarter point a short while ago.