Bonds Erase Most of The Overnight Weakness

Thu, Jan 22 2026, 4:07 PM

Thursday could be viewed two ways. On one hand, bonds lost ground early and were unable to recover it by the 3pm close. On the other hand, there was a decent rally on Wednesday that set a high bar for additional gains. In other words, it’s a victory to merely hold close to yesterday’s closing levels. Data passed without a trace, either because it was stale, near consensus, or both. There was better buying in the afternoon–a fact that’s consistent with our observation that the EU session had an impact today. The afternoon bond market recovery commenced when EU markets closed. Correlation, yes, but not necessarily causality.

- Continued Claims (Jan)/10
  - 1,849K vs — f’cast, 1884K prev
- Core PCE Prices QoQQ3
  - 2.90% vs 2.9% f’cast, 2.6% prev
- Corporate profitsQ3
  - 4.7% vs 4.4% f’cast, 0.2% prev
- GDPQ3
  - 4.4% vs 4.3% f’cast, 3.8% prev
- GDP Final SalesQ3
  - 4.5% vs 4.6% f’cast, 7.5% prev
- Jobless Claims (Jan)/17
  - 200K vs 212K f’cast, 198K prev
- PCE Prices (Q/Q)Q3
  - 2.8% vs 2.8% f’cast, 2.1% prev
- Core PCE (m/m) (Nov)
  - 0.2% vs 0.2% f’cast, 0.2% prev
- Core PCE (y/y) (Nov)
  - 2.8% vs 2.8% f’cast, 2.7% prev
- PCE (y/y) (Nov)
  - 2.8% vs 2.8% f’cast, 2.7% prev
- PCE prices (m/m) (Nov)
  - 0.2% vs 0.2% f’cast, 0.2% prev

08:34 AM

Modestly weaker overnight and no reaction to AM data so far. MBS down an eighth and 10yr up 1.7bps at 4.258

10:30 AM

No major reaction to PCE data. MBS still down an eighth and 10yr up 2bps at 4.261

12:37 PM

Bouncing back a bit. MBS down only 2 ticks (.06) and 10yr up only 1.3bps at 4.254

03:22 PM

MBS down 3 ticks (.09) and 10yr up 0.8bps at 4.249

Bonds Erase Most of The Overnight Weakness