After the 10-year US Treasury yield broke through support and lured in speculative capital, the MBS spread remained almost unchanged, awaiting the US PMI decision.

(1) On Thursday, institutional data showed the UMBS30 basis point spread remained roughly flat to slightly wider. After climbing overnight, US Treasury yields retreated, remaining nearly unchanged. The 10-year yield briefly pierced the crucial technical support level of 4.309%, immediately triggering dip buying that prevented further acceleration of the decline.(2) Global macro signals overnight were mixed. Eurozone PMI readings were a combination of positives and negatives, while UK PMI unexpectedly outperformed expectations. German and UK government bond futures recorded only slight drops of less than 0.1 point and 0.4 point, respectively. The market's attention is now collectively turning to the imminent release of the US S&P Global PMI data for directional catalysts.(3) Equity markets modestly retraced after both the S&P 500 and Nasdaq Composite set new all-time closing highs on Wednesday. The three major stock indices opened with declines ranging from 0.2% to 0.5%. The VIX fear index climbed 0.45 points to 19.36, and the credit spread indicator IGCDX widened by 0.3 basis points to 54.4 basis points. Risk appetite is retreating in a restrained manner.(4) Despite appearances of fragile ceasefire, there are undercurrents in the Middle East situation. After US forces intercepted three Iranian oil tankers in Asian waters, Trump went a step further by ordering the Navy to shoot and sink any vessels laying mines in the Strait of Hormuz. West Texas Intermediate crude responded, rising 1.1% to $93.97 per barrel, and Brent crude gained 0.8% to $102.70 per barrel.(5) The US Treasury yield curve continued to flatten, with the two-year and ten-year spread narrowing by 0.4 basis points to 49.4 basis points, and the ten-year and thirty-year spread compressing a further 0.6 basis points to 60.3 basis points. Swap spreads narrowed between 0.25 and 0.5 basis points in the five-to-thirty-year segment. The market's demand for long-term inflation compensation is loosening at the margins.(6) UMBS30 quotes in the 4.5%–6% coupon range remained generally unchanged to slightly down by up to three ticks, while the five-year UMBS15 product recorded declines of one to three ticks. The agency mortgage-backed securities market currently exhibits a typical wait-and-see pattern, with both bull and bear sides reluctant to make directional bets before the PMI data delivers a clear signal.