Treasuries were stronger overnight as Asian accounts kicked off the session piling in to the same post Verizon/10yr Auction positivity seen during Wednesday's domestic session. They held that strength overnight and even extended the gains in the morning hours despite a tricky Jobless Claims report (more in the recap below). The run up to the 30yr auction saw a small amount of weakness in 30's vs 10's, but the auction results showed that markets did a great job of getting into position ahead of time.
The yield award was very close to expectations and the bid-to-cover moved off last month's 4yr+ lows by an amount that was "just right" (not too little to be meaningful, but not so much to cause volatility in the other direction). 10yr yields and MBS haven't moved more than a few ticks in either direction since the auction, very much consistent with our first observation of the day, that yesterday felt more like the "sigh of relief" more typically seen on Thursday's completion of an auction cycle. That makes 1pm through the close sort of superfluous, hopefully.
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 11:08 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
Holding Moderate Gains After Data
Treasuries were stronger right out of the gate overnight as Yen strengthened and the Nikkei fell. All three moves were over by 10pm and Treasuries held sideways from there, albeit with slight volatility between 2.9 and 2.88.
With Treasuries hitting the domestic session in slightly positive territory, MBS did the same, but to a lesser extent. In fact "same but to a lesser extent" would be a good theme for MBS, in general this week, as they continue to gain less and lose less than Treasuries.
This morning's Jobless Claims numbers provided misdirection and another small dose of volatility. Although the headline was much lower than expected, the Labor Department essentially said "don't pay attention to this one," as they highlighted a computer upgrade that prevented two states from processing Claims.
Whatever initial selling bias that existed at the headline was immediately arrested and bond markets changed course to head into stronger territory. At this point, Treasuries are at their best yields of the overnight or domestic session with 10's at 2.87. Fannie 4.0s are up 6 ticks at 102-20.
The next major calendar item is the 30yr Bond Auction at 1pm.
ECON: Imports and Exports Both Lower Than Expected
- Import Prices +0.0 vs +0.4 forecast
- Export Prices -0.5 vs +0.1 forecast
- Market Reaction: essentially none, but tough to say as a stronger inflation number may have had some negative effect. So perhaps it helped hold ground. Markets don't react much to this series of data anyway.
Prices for U.S. imports were unchanged in August, the
U.S. Bureau of Labor Statistics reported today, after
ticking up 0.1 percent in July. In August, higher fuel prices were offset by declining nonfuel prices. U.S.
export prices fell 0.5 percent in August following a 0.1 percent decrease the previous month.
ECON: Jobless Claims Lower or Higher; We May Never Know
- Claims 292k vs 330k Forecast, 323k Previously
- Labor Dept analyst says bulk of the decline is due to computer upgrades in 2 states that prevented full processing of Claims.
Market Reaction: this one was tossed off the assembly line as defective.
In the week ending September 7, the advance figure for seasonally adjusted initial claims was 292,000, a decrease of 31,000 from the previous week's unrevised figure of 323,000. The 4-week moving average was 321,250, a decrease of 7,500 from the previous week's revised average of 328,750.
The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending August 31, a decrease of 0.1 percentage point from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 31 was 2,871,000, a decrease of 73,000 from the preceding week's revised level of 2,944,000. The 4-week moving average was 2,953,000, a decrease of 24,750 from the preceding week's revised average of 2,977,750.
Live Chat Featured Comments
Victor Burek : "interesting Gallup info, and our economy is supposed to be booming, http://www.gallup.com/poll/164363/americans-struggle-afford-food.aspx?utm_source=add_this&utm_medium=addthis.com&utm_campaign=sharing#.UjGrlgn-GGQ.twitter"
Matthew Graham : "3.3 moving down to 2.8 would be about middle of the road guess"
Jason York : "i do, everything that has been being reported now and in the past month or two is mostly June and July results"
Dustin McAlister : "BEst educated guess MG, around .25-.55?"
Dustin McAlister : "All due to the sharp increase in rates 2nd and 3rd quarter"
Victor Burek : "I do"
Dustin McAlister : "Curious, anyone else feel next quarter will reveal what we all know, things aren't getting better and are slowing down and rates dip some, not a lot, but some in first quarter next year? "
Matt Hodges : "mg - the best ex comment in rate watch - gj - its a challenge explaining that spread sometimes why it's better to take the higher rate"
Andy Pada : "seems like people bought/leased their cars in July; maybe Aug. will be light"
Matthew Graham : "July"
Andy Pada : "that credit/debt number we received earlier in the week, for what month was that?"
Matthew Graham : "RTRS - U.S. AUG EXPORT PRICES -0.5 PCT (CONSENSUS +0.1 PCT) VS JULY -0.1 PCT (PREV -0.1 PCT) "
Matthew Graham : "RTRS- U.S. AUG IMPORT PRICES UNCHANGED (CONSENSUS +0.4 PCT) VS JULY +0.1 PCT (PREV +0.2 PCT) "
Matthew Graham : "oh yeah, thanks for the reminder. I guess there was other data this morning"
John Tassios : "on another note, my low inflation theme looking good with the import / export prices"
Victor Burek : "no inflation"
Matthew Graham : "Dear Labor Department: Thanks for picking such an inconsequential date for your computer upgrades, seeing as how it's not survey week for NFP or anything, let alone the week before a very big Fed Announcement."
David Gaffin : "hope they were 2 really big states"
Matthew Graham : "RTRS - LABOR DEPT ANALYST SAYS BULK OF THE DECLINE IN INITIAL CLAIMS APPEARS DUE TO COMPUTER UPGRADES IN TWO STATES WHICH PREVENTED FULL PROCESSING OF CLAIMS "
Matthew Graham : "RTRS - US JOBLESS CLAIMS FELL TO 292,000 SEPT 7 WEEK (CONSENSUS 330,000) FROM 323,000 PRIOR WEEK (PREVIOUS 323,000) "