It was hard to know exactly what to expect coming into today's session, but one of the fairer guesses was that we'd see some measure of support from month-end buying (money managers needing to add longer duration debt to bring portfolios in line with indexes). Even so, the stock lever is still relatively well-connected, suggesting that the risk-on vs risk-off trade is also part of the positivity. That's somewhat reassuring as we wouldn't want today's gains to be merely a factor of month-end. So far, MBS have traded inside a range set by Friday's latest levels on the low end (around 104-22) and Monday's highs (around 104-31). Treasuries are continuing a trend toward lower yields, but haven't made any moves big enough to suggest it's anything other than range-trading ahead of tomorrow's full slate of data and Friday's NFP.
MBS Pricing Snapshot
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Pricing as of 11:08 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: Chicago PMI Misses Estimates Slightly, Employment Lower
- PMI 49.9 vs 51.0 Consensus
- New Orders 50.6 vs 47.4 last month
- Employment 50.3 vs 52.0 last month
"The Chicago Purchasing Managers reported October's Chicago Business Barometer idled, up just 0.2 to a still contractionary 49.9. Business Activity measures reflected weakness in five of seven indexes, most notably as the rate of expansion in Production and Employment slowed while New Orders stalled near neutral and Order Backlogs remained in contraction."
- EMPLOYMENT: 33 month low;
- INVENTORIES: slipped into contraction;
- PRICES PAID: inflation slowed a bit;
Moderately Weaker Overnight, Bond Markets Improve Into Domestic Hours
So far, on this first morning back on line after the unexpected 1.75 day break, bond markets have maintained a high level of composure. Some of that composure is to be expected given the assumed mini-glut of month-end buying needs that were not able to be satisfied yesterday and for most of Monday, but that alone wouldn't be enough to guarantee a positive day for bond markets today.
Indeed, the first move was higher in yield during the overnight session as risk markets made an abrupt move higher at the start of the European session. But once domestic accounts began trading early this morning, the cards being laid down showed an increasingly strong hand. 10yr yields moved from overnight highs around 1.76 in the 6am hour, down to 1.72 by 9:30am.
MBS opened up right in line with Friday's latest latest levels with Fannie 3.0's coming in at 104-22. They've since ground steadily higher and are currently up 5 ticks on the morning at 104-27.
This morning's economic data hasn't had much of an impact--especially the 8:30am Employment Costs as markets were clearly focused primarily on tradeflows at that time. Things have ticked just a touch weaker after Chicago PMI despite the lower-than-expected reading, but we still wouldn't assume the price action is overly connected to the economic data. Speaking of which, there's no more data on tap for today, so we'll watch flows and cross our fingers that month-end buying needs help things stay supportive. Definitely "so far so good," though.
ECON: Employment Costs Rise Slightly Slower Than Expected
- Employment Costs +0.4 vs +0.5 Consensus
- Wages/Salaries +0.3 vs +0.4 Consensus
Compensation costs for civilian workers increased 0.4 percent, seasonally adjusted, for the 3-month period ending
September 2012, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of
compensation costs) increased 0.3 percent, and benefits (which make up the remaining 30 percent of compensation) increased
Live Chat Featured Comments
Victor Burek : "yes..that is correct"
Jason Zimmer : "correct"
Joey Hansen : "Forgive me if this has been covered previously, but am I reading the latest DU 9.0 release notes correctly? No more 2055s or 2075s? ONLY 1004s going forward?"
Blair J. Beard : "Rob, Genworth has some decent courses however none are processor specific"
Rob Ellis : "Any suggestions for online mortgage processor training? I'd prefer hands on but due to logistics it's not possible."
Matthew Graham : "RTRS- CHICAGO PMI EMPLOYMENT INDEX 50.3 IN OCT VS 52.0 IN SEPT "
Matthew Graham : "RTRS- CHICAGO PURCHASING MANAGEMENT INDEX 49.9 IN OCTOBER (CONSENSUS 51.0) VS 49.7 IN SEPTEMBER "
Matthew Graham : "RTRS - TREASURY SAYS STILL EXPECTS DEBT LIMIT TO BE REACHED AT END OF 2012, USE EXTRAORDINARY MEASURES TO MEET DEBT OBLIGATIONS UNTIL EARLY 2013 "
Jill Statz : "Direct Mortgage can do LP's that high"
Edie Clark : "LP Open Access 118% LTV with MI (UG)..anyone know what Lenders will do this loan? Property is in WA State. Thanks!"
Matthew Graham : "RTRS- U.S. Q3 BENEFIT COSTS +0.8 PCT, BIGGEST RISE SINCE Q2 2011, VS Q2 +0.6 PCT (PREV +0.6 PCT) "
Matthew Graham : "RTRS- U.S. Q3 EMPLOYMENT COST INDEX +0.4 PCT (CONSENSUS +0.5 PCT) VS Q2 +0.5 PCT (PREV +0.5 PCT)"
Dean Gorenflo : "true, but it was a bit worse an hour ago"
Oliver S. Orlicki : "Gm, red start"