There's definitely a more even-keeled tone about today's trading vs Friday's, when the big news hit of the meeting between ECB Pres Draghi and the German Central Bank Chief, ostensibly so the former could convince the latter that ECB bond buying is justified. That news kicked off the biggest spike down for MBS prices on Friday, but we've now risen to slightly HIGHER levels than those seen right before Friday's tape-bomb. Similarly, Treasury yields are just under their pre-Friday-sell-off levels with 10's currently at 1.5155. Volume remains steady and strong, but without the violent spikes. On a final positive note, bond markets are marching to the beat of their own drummer to some extent as early gains in the Euro and equities markets did little to pull up bond yields.
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Pricing as of 11:09 AM EST
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Bond Markets Holding Ground In High Volume
There's a certain measure of electricity in the air given the line up of events set to take place later this week. With FOMC, ECB, and NFP on Wed, Thurs, and Fri respectively, markets can be reasonably assured that big moves are possible, and perhaps even likely.
Today then, stands in a bit of contrast to the balance of the week as there is no significant scheduled data and we've seen no major developments in the overnight or early domestic trading. Despite that, volume is above average, and especially so for a data-free Monday morning.
After experiencing their worst day of losses since early March, MBS and Treasuries are holding their ground fairly well this morning, even if they're not bouncing back. Fannie 3.0's are 3 ticks better than Friday afternoon at 103-18 and 10yr yields are a bit less than 1bp lower at 1.5394. S&P futures are about 5 points off their Friday highs (but still more than 20 pts higher than their Friday lows!).
Essentially, what we're left with is the sense that markets are warming up ahead of a big game. Volume is high, but levels are relatively neutral and haven't moved much since Friday. It's tempting to liken the dynamics to the Olympic opening ceremonies, but to be clear, that would be the average historical version of the opening ceremonies and not the most recent one. Otherwise, that might give the impression that we think this weeks trading will quickly become weird, non sequitur, anticlimactic, confusing, and strangely unfulfilling.
Live Chat Featured Comments
Matthew Graham : "RTRS- DALLAS FED TEXAS MANUFACTURING INDEX OF GENERAL BUSINESS ACTIVITY -13.2 IN JULY VS 5.8 IN JUNE "
Matthew Graham : "RTRS - DALLAS FED TEXAS MANUFACTURING OUTPUT INDEX 12.0 IN JULY VS 15.5 IN JUNE "
Matthew Graham : "normally wouldn't note a Dallas Fed survey as it normally doesn't register a response (and indeed the timing could just be coincidental with something more important that I have yet to see), but this one does seem like it's having an effect due to the big miss in General Business Activity."
Matthew Graham : "magic band-aid maybe"
Brett Boyke : "MG the banking license could be the magic ticket for them, sinc ethey would be able to refinance some of the debt?"
Matthew Graham : "yeah, there's a good bit of info off the beaten path. There's a lot that can added to it still. Glad you found it though"
Jason Adams : "I need to keep reading LOL. "
Jeff Anderson : "And........?"
Jason Adams : "MG I did some reading in the "learn" section over the weekend"
Matthew Graham : "Specifically, Reuters notes "Euro money market traders" in the article itself"
Matthew Graham : "REUTERS POLL-20 OF 24 SAY ECB WILL NOT PERMIT NATIONAL CENTRAL BANKS TO BUY PRIVATE SECTOR ASSETS "
Matthew Graham : "REUTERS POLL-16 OF 22 TRADERS SAY ECB WILL NOT EMBARK ON QUANTITATIVE EASING (UNSTERILISED BOND PURCHASES) "
Matthew Graham : "REUTERS POLL-17 OF 24 SAY ECB TO GIVE ESM A BANKING LICENSE "
Matthew Graham : "REUTERS POLL-18 OF 24 SAY ECB TO PERSUADE EFSM/ESM TO BUY SPANISH, ITALIAN GOVT BONDS "
Matthew Graham : "REUTERS POLL-TRADERS SPLIT ON WHETHER ECB TO CONDUCT ANOTHER LONG-TERM REFINANCING OPERATION "
Matthew Graham : "REUTERS POLL-19 OF 24 TRADERS SAY ECB TO RE-START BOND PURCHASES OF SPANISH, ITALIAN GOVT BONDS, 10 OF 19 SAY ON THURSDAY "