Bonds saw a bit of a reversal on Friday as rising yields took a pause and retreated a bit. The benchmark 10-year treasury yield fell 3 basis points to 1.46% as prices rose.  

Despite the rally in treasuries, mortgages outperformed and were tighter across the stack, with production coupons 2%-2.5% tighter 3-4 ticks (3/32nd). Tradeweb blockflows for UMBS30 indicated better buying (nearly 2x that of sells) with the UMBS30 2.0% coupon heavily favored. UMBS30 2.0% prices rose 11/32nd to 100-21 and UMBS15 1.5% popped 8/32nd to 101-07+. The Fed ended the week purchasing $25.2B in total between UMBS30, UMBS15 and GNIIs.

The fourth quarter kicked off Friday with equity investors turning a page on the worst quarter in nearly a year and a half. Despite major indices still down over 2% on the week, the DJIA closed up +482.54 to 34326.46 and the S&P rose +49.50 to 4357.04, a sharp rebound and signal the risk-off sentiment might be exhausted heading into October. Uncertainty around stimulus and spending packages, along with central bank tapering of support are still relevant themes which investors must grapple with. U.S consumer spending figures produced promising results, showing an 0.8% increase for the month of August, but many point to inflation as the driver versus a tick up in spending activity. For the week ahead, heavy focus will remain on the debt ceiling debate in Congress as we move closer to the October 18th deadline to raise or extend, in addition to infrastructure, social and climate spending packages currently in discussion. The tail end of the week will produce jobs figures for the month of September in the nonfarm payrolls report.

From Elliot Eisenberg, the Bowtie Economist: Word Wealth – The Friday File: In 2011, “mesothelioma” was the most costly keyword to bid on in Google Ads, at a cost per click of $42.51. Of late, “law” keywords (like car accident lawyer, malpractice lawyer) are even more expensive at $54.86/click, but that now places them just fourth. In third, “casino” at $55.48, in second, “bail bonds” at $58.48 and topping the list, “business services” (like data storage and network security).