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Mixed Overnight, Weaker Into US Hours, Trying to Hold Ground
Posted to: Micro News
Wednesday, October 16, 2013 9:51 AM
Treasury yields moved higher into the overnight session, but fell during European hours, hitting the US open right in line with yesterday's latest levels. The political press mill is churning full tilt with news of a Senate-drafted debt deal being reported as if it were new news for the past 12+ hours. Those headlines continue flowing presently with wires suggesting a deal is imminent and that the Senate is in talks with the White House regarding strategy to get the bill passed by the House.
Bond markets have moved into weaker territory since the beginning of the domestic session. 10yr yields' backs are up against a wall at very important technical levels (2.744 currently, which is the last frontier of the dividing line between the current range and the next one higher: 2.75-3.0).
So far, 10's have held their ground before breaking above 2.75, and while that continues to be the case, MBS have moved off their lows of the morning, now back to 100-26 in Fannie 3.5s--only 2 ticks weaker on the day. Fannie 4.0s are back to unchanged on the day.
NAHB's Housing Market Index will report as normal at 10am, but the more relevant data arrives this afternoon in the form of the Fed's Beige Book (not normally a big deal, but in this environment, it comprises a much greater portion of the total body of economic data, so we're at least tuning in). Beyond that, fiscal headlines will likely continue doing what they do. "Fool me twice" has long since passed when it comes to markets reacting to a resolution that isn't really a resolution, so if one actually comes, expect the reaction to be bigger.
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