By now it should be reasonably understood that there is no hard and fast rule that says stock prices will always move with bond yields as has been the general historical tendency. The onset of European turmoil has afforded both sides of the domestic market to make gains where they otherwise would demonstrate a bit more push and pull. That said, it's still fairly common to see the "positive correlation" (Treasury yields tend to move up when stock prices are moving up) even though the "MAGNITUDE" of the correlation has allowed each side of the market to make gains in the longer run. And it's the same story this morning. Bond prices are higher and stocks are insanely higher. The stock lever has weighed on bonds to some extent, but only inasmuch as it has prevented further gains. Both Treasuries and MBS are doing an admirable job holding their ground in the face of a stampeding stock market correction (S&P Futures 1346 to 1361 in the first hour after the open).
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
Pricing as of 11:09 AM EST
Morning Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts
and updates issued via email and text alert to MBS Live subscribers
ECON: Consumer Sentiment Higher Than Expected
* Sentiment 77.8 vs 76.2 consensus
* current conditions 87.3 vs 83.0 consensus
* expectations 71.7 vs 72.5 consensus
* 12 month outlook and inflation expectations close to unchanged
* sentiment index and current conditions highest since 1/2008
(Reuters) - U.S. consumer sentiment rose to
its highest in more than four years in early May as Americans
remained upbeat about the job market, a survey released on
The Thomson Reuters/University of Michigan preliminary May
reading on the overall index on consumer sentiment improved to
77.8 from 76.4 in April, topping forecasts for 76.2.
It was the highest reading since January 2008.
Despite the recent slowdown in job growth, nearly twice as
many consumers reported hearing about new job gains than said
they had heard about recent job losses, the survey said.
The data suggests that either more positive numbers on the
labor market will be seen soon, or that consumers have ratcheted
up their expectations too high, survey director Richard Curtin
said in a statement.
"The most likely prospect is that job growth returns to a
modest pace of gains and consumers trim their overly optimistic
expectations, with not much change in overall confidence until
after the November (presidential) election and the decisions on
tax policy," said Curtin.
Risk-On, Risk-Off. Bond Markets Stronger, Stocks Weaker After JPM
The overnight session was fairly uneventful after receiving a major "risk-off" adjustment late yesterday.
JPMorgan reveals $2 bln trading loss, CEO Dimon admits "egg on face"
(Reuters) - JPMorgan Chase & Co, the biggest U.S. bank by assets, said it suffered a trading loss of at least $2 billion from a failed hedging strategy, a shock disclosure that hit financial stocks and the reputation of the bank and its CEO, Jamie Dimon.
S&P futures shot down well over 10 pts on the news and never really recovered. Volume and volatility picked up slightly in the European session, but the expected news out of Spain regarding a plan to address its banking crisis proved to be of little concern for risk markets (more on that in the "day ahead" linked below).
Apart from scheduled Fed Twist buying in the 25-30yr sector from 10:15-11:00am, the only other scheduled event today is Consumer Sentiment at 9:55am. Technical levels are best observed in Treasuries as opposed to MBS with the mid 1.83's being the key resistance and/or pivot point "gateway" to further potential progress. 1.87-1.88 is the overhead support. As far as MBS are concerned, it would by psychologically "cool" to hold 104-00, but firmer support is 103-29 (if things happen to get weaker), followed by 103-22 (if they get appreciably weaker). Overhead resistance at 104-05/104-06.
ECON: Producer Price Index Lower Than Expected. "Core" as Expected
* Headline PPI -0.2 pct vs 0.0 consensus
* Core PPI +0.2 pct as expected
* Year/Year Headline +1.9 vs +1.2 consensus
* Year/Year Core +2.7 vs +2.8 consensus
* year over year PPI lowest since October 2009
The Producer Price Index for finished goods fell 0.2 percent in April, seasonally adjusted, the
U.S. Bureau of Labor Statistics reported today. Prices for finished goods were unchanged in
March and increased 0.4 percent in February. At the earlier stages of processing, prices received
by manufacturers of intermediate goods decreased 0.5 percent in April, and the crude goods
index moved down 4.4 percent. On an unadjusted basis, prices for finished goods advanced 1.9
percent for the 12 months ended in April, the seventh straight month of slowing year-over-year
increases following a 7.0-percent rise for the 12 months ended September 2011.
Live Chat Featured Comments
Matthew Graham : "THOMSON REUTERS/U. OF MICH CONSUMER SENTIMENT INDEX AND CURRENT CONDITIONS INDEX AT HIGHEST SINCE JAN 2008 "
Matthew Graham : "THOMSON REUTERS/U. OF MICH CONSUMER EXPECTATIONS INDEX PRELIMINARY MAY 71.7 (CONSENSUS 72.5) VS FINAL APRIL 72.3 "
Matthew Graham : "THOMSON REUTERS/U. OF MICH CURRENT CONDITIONS INDEX PRELIMINARY MAY 87.3 (CONSENSUS 83.0) VS FINAL APRIL 82.9 "
Matthew Graham : "THOMSON REUTERS/U. OF MICH US CONSUMER SENTIMENT PRELIMINARY MAY 77.8 (CONSENSUS 76.2) VS FINAL APRIL 76.4 "
MMNJ : "<----is still amazed at the MBS resiliency over the last 6-12 months"
Matthew Graham : "Cash open's been very very good to stocks. Bit of pressure from "the lever.""
Adam Quinones : "http://www.mortgagenewsdaily.com/garrett_watts/"
Adam Quinones : "Corky Watts wrote all sorts of posts on this when he was writing for MND"
Andy Pada : "speaking of banks, does anyone have some good resources on the advantages/disadvantages for a mortgage banker to become a bank?"
Christopher Stevens : "We are starting to build up the repurchasereserve account as well"
Adam Quinones : "banks now storing more and more in reserve account"
Adam Quinones : "eh. primary/secondary spreads are indeed wider but regulatory costs are up as well"
Christopher Stevens : "So I assume at these levels the banks are gettingnice and fat on the spread"
Adam Quinones : "more likely at 102 though"
Adam Quinones : "depends on the value you place on servicing"
B-C : "101-10, maybe at 102?"
Adam Quinones : "no"
Christopher Stevens : "MG- are we getting closer to a liquid 3.0"
Matthew Graham : "104-08-ish"
Andy Pada : "If there was no roll, would we be around 104-10?"
Sung Kim : "love Dimon's quote "just because we are stupid doesnt mean others were""
Matthew Graham : "RTRS - U.S. APRIL YEAR-OVER-YEAR PPI WEAKEST READING SINCE -2.0 PCT IN OCT 2009, CORE LOWEST SINCE MATCHING +2.7 PCT IN AUG 2011"
Matthew Graham : "RTRS- U.S. APRIL YEAR-OVER-YEAR PPI +1.9 PCT (CONS +2.1 PCT), CORE +2.7 PCT (CONS +2.8 PCT) "
Matthew Graham : "RTRS- U.S. APRIL PPI EXFOOD/ENERGY +0.2 PCT (CONS +0.2 PCT) VS MARCH +0.3 PCT "
Matthew Graham : "RTRS- U.S. APRIL PPI -0.2 PCT (CONSENSUS 0.0 PCT), VS MARCH 0.0 PCT "