This morning's alert from MBS Live:

Uneventful Overnight Session Meets Morning Tape-Bombs 8:29AM

Although 10yr yields saw some fast-paced moves between highs and lows last night, those extremes constituted and even narrower range than yesterday's. 10's were mostly between 1.98 and 2.02. Treasuries even did a good enough job of shrugging off this morning's first mini-tape-bomb: China is lowering reserve ratio requirements for Chinese banks by 50%. 10's managed to stay under 2.02% following that news, despite a 16-17 point advance in S&P's. But then the 2nd tape bomb hit right at 8am when the ECB, Fed, and other central banks announced they'd be lowering pricing of liquidity swaps by 50 bps and that the ECB particularly will reduce the initial margine for 3-month dollar-based swaps from 20% to 12%. 

This started of a move higher for Treasuries (and lower for MBS prices) that was just exacerbated by a much-stronger-than-expected ADP Employment print at 815am. If we'd put out the morning update at 7:59 AM, it would be fairly boring and have 10yr yields at 1.98, but as it stands, 10yr yields are at 2.07 20 minutes later after a move that has been almost straight up.

MBS are chopping around a bit, but are certainly weaker, even if not as weak as Treasuries. Fannie 3.5's are down 8 ticks day over day to 101-23. but that could quickly deteriorate if 10's don't hold firm to the 2.07 support. 

There's more to come on the economic calendar as well. Buckle your seatbelts, it could be a bumpy morning trying to get this bird off the ground.

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This morning's video of the MBS Live Dashboard in action:

On tap for the rest of the day:

  • 700 AM - MBA Applications - (DOWN 15% Refi's and DOWN 0.8% purchases)previous purchase change: +8.2% / previous refi change: -4.0%
  • 815 AM - ADP Employment -(ACTUAL: 206k) previous: 110k / forecast 130k
  • 830 AM - Productivity and Costs - (ACTUAL: Productivity +2.3%, Costs -2.5%) previous: 3.1% productivity, -2.4% costs / forecast: 2.6% productivity, -2.2% costs
  • 945 AM - Chicago PMI - previous 58.4 / forecast 58.4
  • 1000 AM - Pending Home Sales - previous change: -4.6% / forecast +1.5%
  • 200 PM - Beige Book