Yields breaking important support
February 27, 2026
********************
–Yields continue to press lower, due in part to scant signs of progress in Iran negotiations. (CLJ6 is 66.40 this morning, +1.20). Ten year ended (at futures settle) at 4,016, down 3.2 bps. This morning it is sub-4% (3.992). The attached chart shows the five-year yield, with support represented by the triple bottom in Sept, Oct and Nov (3.562, 3.548, 3.564). This morning it’s 3.548, targeting sub 3.50.
–There’s been a plenty of discussion about the Citrini report, musings on a world a couple of years into the future dominated by AI, but a here-and-now example is Block cutting 40% of its workforce. FT says the company is “leaning on AI tools.”
–Headlines yesterday about the 30y mortgage rate dropping below 6%. Monthly payment on $400k mortgage at 6.75% is $2595. At 6% it’s $2398, so around $200 less, thought that barely helps with increases in taxes and insurance. Just by comparison, at 4% that payment would be $1910.
–Miran said yesterday that the Fed should cut by about 100 bps this year. He was, of course, ignored, though SOFR contracts from SFRZ6 through SFRZ0 were +2.5 to +3.0. Late new seller of 25k FVJ6 110.5c at 10, settled 9.5 vs 109-2625. Reasonable sale against price resistance/yield support, esp if against existing long.
–PPI expected 2.6% yoy vs 3.0. Ex food and energy 3.0 from 3.3.
