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Stronger ISM Manufacturing Data Trips up Bond Markets, but Only Temporarily
Posted to: Micro News
Friday, August 1, 2014 10:11 AM

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  • ISM Manufacturing 57.1 vs 56.0 forecast, 55.3 previously
  • Highest since April 2011
  • All component indices were stronger than expected/previous readings

ISM is one of the most important pieces of economic data apart from NFP/GDP.  With bond markets already running into some resistance this morning, this made a clear case for a move back in the other direction. Refreshingly, the pull-back was short lived.

MBS had briefly moved down 4 ticks (.125) from some lenders rate sheet print times.  Technically, that's enough for a negative reprice in some cases, though it's unlikely that lenders would have included the full effects of morning price gains on NFP day. 

Add to that the fact that the post-data weakness has already paused and we're left with a line in the sand rather than a full-fledged sell-off.  The line is convenient as it will let us know when negative reprices would start to be a consideration again. 

For MBS, it's at 101-30 in Fannie 3.5s.  We had that moments ago, but have already bounced up to 102-01.   For Treasuries, the line is at 2.56, also seen moments ago before a bounce down to 2.545.

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Mortgage Rates:
  • 30 Yr FRM 3.66%
  • |
  • 15 Yr FRM 2.94%
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  • Jumbo 30 Year Fixed 3.61%
MBS Prices:
  • 30YR FNMA 4.5 108-30 (0-02)
  • |
  • 30YR FNMA 5.0 110-19 (0-02)
  • |
  • 30YR FNMA 5.5 111-26 (-0-04)
Recent Housing Data:
  • Mortgage Apps 10.03%
  • |
  • Refinance Index 11.33%
  • |
  • Purchase Index 8.43%