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You are viewing Micro News from Friday, Jan 31, 2014 - View all recent Micro News
  • 1/31/14
    Glut of Month-End Buying Helps Preserve High, Narrow Range

    Just as MBS looked as if they might be thinking about leaking into weaker territory into the weekend, the 3pm Treasury Pit close brought a glut of month-end buying.  This represents a small, quick scramble among money managers to adjust portfolios for January to fall in line with published indices.

    The month-end buying accounts for the nice little swoop lower in 10yr yields from 2.67 to 2.655 currently and up from 104-23 to 104-25 in Fannie 4.0 MBS.  In terms of price changes, it's not sufficient for positive reprices unless we see a bit more positivity, but it does keep all but the "pipeline control" reprices at bay.

    Category: MBS, UPDATE
    Share:   
  • 1/31/14
    Bond Markets Little-Changed to Marginally Weaker After PMI and Sentiment Data

    The two biggest potential market movers of the day (in terms of economic data) are out and they couldn't have been less exciting.  Here's the run-down:

    Chicago PMI

    • PMI 59.6 vs 59.0 forecast, 60.8 previously
    • "The Employment component fell sharply for the second consecutive month to the lowest since April 2013. The majority of companies said their workforce was unchanged with some of them reporting higher productivity of their employees."
    • Our take on share of (lack of) market movement: would normally be in the neighborhood of 6-7 out of 10, but considering the flatness, that doesn't much matter.  The slightly stronger headline is easily offset by the weak employment internal.
    • Full Release

    Consumer Sentiment

    • Sentiment 81.2 vs 81.0 forecast
    • Current Conditions 96.8 vs 95.5 forecast
    • Expectations 71.2 vs 71.5
    • Our take on share of market movement 3-4 out of 10.  Not much going on with this report today though.

    If anything, the bias has been slightly weaker since the data, though that looks to be as much about the determination in equities markets as anything.  Too, the losses aren't severe--at least not yet.  Hopefully month-end bond-buying can help that continue to be the case as the day progresses, but as always, we'll keep you posted.  10yr yields are holding right at 2.66 currently, and Fannie 4.0s are up 6 at 104-24.  Fannie 3.5s are up 8 at 101-16--both of these are 2 ticks lower from 9:45am levels.

    Category: MBS, UPDATE
    Share:   
  • 1/31/14
    Bond Markets Hold Overnight Gains After Morning Data

    After weakening microscopically for the first few hours of the overnight session, bond markets were soon left with only reasons to rally.  Asian markets took off in bond-friendly directions as equities sold (talk of Japanese fund managers reducing exposure to stocks both foreign and domestic)  and the Yen soaked up more safe-haven demand. 

    The European session was supportive as well with lower than expected inflation in the Eurozone and weak Retail Sales in Germany.  Add to that an average amount of month-end extension buying (fund managers increasing the duration of bond portfolios, which is both typical and generally positive for bond markets in such a way that indirectly benefits MBS) and it has made for a green morning domestically.

    The Incomes and Outlays report at 8:30am did little to change that, despite spending coming in a bit better than forecast.  Here's the run-down:

    Incomes and Outlays

    • Spending +0.4 vs +0.2 forecast
    • Income +0.0 vs +0.2 forecast 
    • PCE Price Index +0.1 vs +0.1 forecast
    • Thoughts on Market Movement: There was perhaps a detectable amount of weakness following the data, but in  the context of this morning, it did more to help the gains level-off than to create any overt movement.
    • Full Release

    The 1-2 punch from Chicago PMI and Consumer Sentiment coming up at 9:45am and 9:55am is more relevant by comparison.   Fannie 4.0s are only a tick off their highs of the morning, currently at 104-25 (+0-06)  while 10yr yields are down 3.6bps at 2.6585.

    Category: MBS, UPDATE
    Share:   
 
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  • 1/31/14

    Just as MBS looked as if they might be thinking about leaking into weaker territory into the weekend, the 3pm Treasury Pit close brought a glut of month-end buying.  This represents a small, quick scramble among money managers to adjust portfolios for January to fall in line with published indices.

    The month-end buying accounts for the nice little swoop lower in 10yr yields from 2.67 to 2.655 currently and up from 104-23 to 104-25 in Fannie 4.0 MBS.  In terms of price changes, it's not sufficient for positive reprices unless we see a bit more positivity, but it does keep all but the "pipeline control" reprices at bay.

    Category: MBS, UPDATE
    Share:   
  • 1/31/14

    The two biggest potential market movers of the day (in terms of economic data) are out and they couldn't have been less exciting.  Here's the run-down:

    Chicago PMI

    • PMI 59.6 vs 59.0 forecast, 60.8 previously
    • "The Employment component fell sharply for the second consecutive month to the lowest since April 2013. The majority of companies said their workforce was unchanged with some of them reporting higher productivity of their employees."
    • Our take on share of (lack of) market movement: would normally be in the neighborhood of 6-7 out of 10, but considering the flatness, that doesn't much matter.  The slightly stronger headline is easily offset by the weak employment internal.
    • Full Release

    Consumer Sentiment

    • Sentiment 81.2 vs 81.0 forecast
    • Current Conditions 96.8 vs 95.5 forecast
    • Expectations 71.2 vs 71.5
    • Our take on share of market movement 3-4 out of 10.  Not much going on with this report today though.

    If anything, the bias has been slightly weaker since the data, though that looks to be as much about the determination in equities markets as anything.  Too, the losses aren't severe--at least not yet.  Hopefully month-end bond-buying can help that continue to be the case as the day progresses, but as always, we'll keep you posted.  10yr yields are holding right at 2.66 currently, and Fannie 4.0s are up 6 at 104-24.  Fannie 3.5s are up 8 at 101-16--both of these are 2 ticks lower from 9:45am levels.

    Category: MBS, UPDATE
    Share:   
  • 1/31/14

    After weakening microscopically for the first few hours of the overnight session, bond markets were soon left with only reasons to rally.  Asian markets took off in bond-friendly directions as equities sold (talk of Japanese fund managers reducing exposure to stocks both foreign and domestic)  and the Yen soaked up more safe-haven demand. 

    The European session was supportive as well with lower than expected inflation in the Eurozone and weak Retail Sales in Germany.  Add to that an average amount of month-end extension buying (fund managers increasing the duration of bond portfolios, which is both typical and generally positive for bond markets in such a way that indirectly benefits MBS) and it has made for a green morning domestically.

    The Incomes and Outlays report at 8:30am did little to change that, despite spending coming in a bit better than forecast.  Here's the run-down:

    Incomes and Outlays

    • Spending +0.4 vs +0.2 forecast
    • Income +0.0 vs +0.2 forecast 
    • PCE Price Index +0.1 vs +0.1 forecast
    • Thoughts on Market Movement: There was perhaps a detectable amount of weakness following the data, but in  the context of this morning, it did more to help the gains level-off than to create any overt movement.
    • Full Release

    The 1-2 punch from Chicago PMI and Consumer Sentiment coming up at 9:45am and 9:55am is more relevant by comparison.   Fannie 4.0s are only a tick off their highs of the morning, currently at 104-25 (+0-06)  while 10yr yields are down 3.6bps at 2.6585.

    Category: MBS, UPDATE
    Share:   
 
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