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Bond Markets Looking Determined To Move Weaker Despite Data
Posted to: Micro News
Wednesday, November 14, 2012 9:31 AM

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Despite weaker-than-expected Retail Sales and lower-than-expected inflation, bond markets are on the move to weaker territory this morning. The initial reaction to the economic data was actually fairly intuitive, with brief moves into better territory, but the bounce was short-lived.

In fact, any positivity we've seen so far this morning is barely detectable against the backdrop of persistent overnight weakness which is merely extending a trend higher in yields. The Asian trading hours kicked things off in relatively calm fashion, with 10yr yields risking just barely over 1.6, but European hours were much choppier by comparison with a quick swing up over 1.63 and a dip back down to 1.61 just after the US open.

Fannie 3.0s are down 7 ticks so far on the day at 104-21, their lowest marks since 11/6 and 10yr yields are up to 1.627. Notably, there's a fairly important medium term resistance level around 1.61 in 10yr yields. The price action so far today threatens to add to the case for a bounce against that resistance with yesterday's high 1.5's looking like the same sort of "failed test" we saw at the end of August.

MBS specifically are another problem unto themselves as they can't currently be counted on to mirror and match the movements in benchmarks--at least not if the past two session are any indication. At least we're not underperforming today to the same extent we were yesterday.

Coming up at 10am, we have Business Inventories and the Obama news conference, likely to be focused primarily on the Fiscal Cliff, certainly the flavor of the next two months. FOMC minutes will be out at 2pm this afternoon.

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Mortgage Rates:
  • 30 Yr FRM 3.67%
  • |
  • 15 Yr FRM 2.95%
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  • Jumbo 30 Year Fixed 3.62%
MBS Prices:
  • 30YR FNMA 4.5 108-28 (0-00)
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  • 30YR FNMA 5.0 110-17 (-0-04)
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  • 30YR FNMA 5.5 111-30 (0-02)
Recent Housing Data:
  • Mortgage Apps 10.03%
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  • Refinance Index 11.33%
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  • Purchase Index 8.43%