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Bond Markets Weaker After ISM Data
Posted to: Micro News
Friday, November 01, 2013 10:12 AM
Yet another piece of October data is out showing stronger than expected economic traction in spite of the government shutdown. While Not on the same magnitude scale as yesterday's Chicago PMI, today's ISM data still managed to beat expectations, coming in at its highest level since April 2011.
Bond markets are weaker on the news with 10yr yields up to 2.596 and Fannie 3.5s down 10 ticks at 102-06. They lost 3-4 ticks on the data.
Reprice risk is slightly elevated for lenders who were already out with rates. Current losses are just on the edge of meaningful. Most lenders would probably give it a few more minutes to hold ground or want to see more losses before repricing, but we can rule it out simply based on the data available now. To whatever extent we want to infer future weakness in MBS based on Treasuries weakening, Treasuries are weakening as I type. 10's just broke 2.604, slightly increasing the risk that MBS will fall enough to more firmly suggest negative reprices.
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