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MBS RECAP: NFP's Stolen Thunder

By: Matthew Graham
Posted Thu, Dec 5 2019, 5:41 PM

After the little bout of whipsaw volatility of the past 3 trading sessions, it will be a tall order for even the mighty NFP to move markets much tomorrow (as long as it's not insanely far from the forecast).  Thank the trade war for that.  Trade headlines took a big bite out of yields on Tuesday morning and subsequent headlines pushed back in the other direction about 24 hours later.  

But markets continued to move after that, and it would be very hard to chalk today's movement up to trade.  Reason being, stocks and bond yields moved in opposite directions during the morning's most active trading.  If trade were the driver, we'd see stronger correlation.

The dark horse market mover isn't easily identified, but the best guess would be a simple move to the sidelines on both sides of the market.  This could have something to do with impeachment proceedings, NFP, or simply an active week of conflicting trade war headlines that coincides with impeachment proceedings and NFP!  

Either way, bonds tanked early (right at the 8:20am CME Open, which suggests traders were lined up to "get out").  Stocks tanked right at 9:30am (the NYSE open...) which suggests--well... the same thing it suggested for bonds.  Fortunately, the stock selling was brisk enough to result in some of the money landing in the safe haven provided by bonds.  10yr yields recovered to end the day only 3bps higher at 1.81%.  Fannie 3.0 MBS outperformed--as they tend to do on red days--with prices down only 2 ticks (0.06) at 101-11 (101.34).


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
101-11 : -0-02
Treasuries
10 YR
1.8090 : +0.0280
Pricing as of 12/5/19 5:40PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
8:41AM  :  ALERT ISSUED: Yields Jump a Bit at 8:20 CME Open

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Dan Shapiro  :  "10 yr gap filled... need to fill the other gap at 1.71"
Matthew Graham  :  "includes tier 1"
Clay Schmeisser  :  "MG - rookie question - does our normal membership include that or is that separate?"
Timothy Baron  :  "BOOM!"
Clay Schmeisser  :  "oh man!!! look at Tim B on the cover of that!!! thata boy!!!"
Matthew Graham  :  "http://marketnewsletters.com/"
Tyler Howe  :  "andddd with that said who can i talk to about setting up the weekly MarketNewsletter for my clients ? =]"

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Dec 05
8:30 Jobless Claims (k) w/e 203 215 213
10:00 Factory orders mm (%) Oct 0.3 0.3 -0.6
Friday, Dec 06
8:30 Non-farm payrolls (k)* Nov 180 128
8:30 Unemployment rate mm (%)* Nov 3.6 3.6
10:00 Consumer Sentiment Dec 97.0 96.8
10:00 Wholesale inventories mm (%) Oct 0.2 0.2

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