Bond markets haven't had much to go on since Tuesday's jobs report inspired a decisive move to the best levels in months. This morning was no exception, with a fairly equivocal Jobless Claims report, and inconsequential International Trade report, and a nonexistent New Home Sales report which wasn't so much postponed as it was scrapped altogether--destined for inclusion in next month's numbers (released on Dec 4).
In the absence of data, trading levels have muddled sideways for the past two days. Yesterday's bias was positive for most of the day, slipping in the afternoon, and today's bias has been mostly negative. Between the two, the overall sideways range remains (roughly 102-18 to 102-30 for Fannie 3.5 MBS and 2.47 to 2.51 in 10's). On both accounts, we're closer to the weaker side of those ranges. The next potentially informative event is the 30yr TIPS auction at 1pm.
MBS Pricing Snapshot
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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
Bond Markets Slip Ahead of New Home Sales; Infinitesimal Reprice Risk
MBS and Treasuries just slipped into negative territory after the Fed unveiled a liquidity plan it says is tougher than Basel III. It's not entirely clear if that news prompted the pull-back, but it coincides.
Fannie 3.5s are down to 102-20 after earlier highs of 102-25. There's an outside chance that a lender priced today's rate sheets during those highs and is already considering a negative reprice. Even then, we'd imagine most would hold out at least a few more minutes to observe any market-based effects of the New Home Sales data coming out at 10am.
Slightly Weaker After Data, but Bouncing Back Into Positive Territory
It was an uneventful overnight session for Treasuries. 10's started out heading slightly higher in yield, but never broke above 2.51. 6am-8am saw the weakness turn around and we approached the 8:30am data from the best levels of the session.
At that time, 10's were near 2.485 and MBS were just edging up to 102-24 in Fannie 3.5s. The first move following data was weaker, but it now looks to be unwinding. 10's are back to unchanged levels and MBS--which had just been trading at unchanged levels--are now up 3 ticks to 102-23.
ECON: Trade Deficit Stays Narrower Than Expected
- Trade Deficit $38.8 bln vs $39.5 bln forecast
The U.S. Census Bureau and the U.S. Bureau of
Economic Analysis, through the Department of Commerce,
announced today that total August exports of $189.2 billion
and imports of $228.0 billion resulted in a goods and services
deficit of $38.8 billion, up from $38.6 billion in July, revised.
August exports were $0.1 billion less than July exports of
$189.3 billion. August imports were virtually unchanged at
In August, the goods deficit increased $0.1 billion from
July to $58.2 billion, and the services surplus was virtually
unchanged at $19.4 billion. Exports of goods decreased $0.3
billion to $132.4 billion, and imports of goods decreased $0.1
billion to $190.7 billion. Exports of services increased $0.1
billion to $56.8 billion, and imports of services increased $0.2
billion to $37.4 billion.
The goods and services deficit decreased $5.2 billion
from August 2012 to August 2013. Exports were up $7.2
billion, or 3.9 percent, and imports were up $1.9 billion, or 0.9
ECON: Jobless Claims Higher Than Expected
- 350k vs 340k forecast, 362k previously
- Continued Claims 2.874 mln vs 2.875 mln forecast
- Market reaction: Bond markets unable to rally past morning's best levels so far. First detectable move is weaker (lower MBS prices).
In the week ending October 12, the advance figure for seasonally adjusted initial claims was 358,000, a decrease of 15,000 from the previous week's revised figure of 373,000. The 4-week moving average was 336,500, an increase of 11,750 from the previous week's revised average of 324,750.
The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending October 5, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending October 5 was 2,859,000, a decrease of 43,000 from the preceding week's revised level of 2,902,000. The 4-week moving average was 2,875,750, an increase of 17,750 from the preceding week's revised average of 2,858,000.
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Jason York : "just got this from Plaza regarding transcripts: The IRS reports that they are approaching normal turn times. Therefore, Plaza will begin requiring IRS Transcripts on loans purchased on or after Monday, October 28, 2013. "
Matthew Graham : "RTRS- FED'S LIQUIDITY PLAN IS MORE STRINGENT THAN BASEL RULES - FED'S TARULLO "
Matthew Graham : "RTRS- U.S. FEDERAL RESERVE STAFF LAUNCHES LIQUIDITY COVERAGE RATIO FOR BANKS "
Matthew Graham : "these are from a few minutes ago:"
Michael Gillani : "Why the quick drop"
Roger Moore : "suintrust is pretty strong "
Steve Schultz : "Best wholesale jumbo pricing at this point? Any opinions?"
Christopher Stevens : "As MG said this morning..."not exactly healthy for rates to fall any more quickly than they already are. Corrections, pauses, retracements, and consolidation all promote sustainability for rallies that hope to see old age.""
Victor Burek : "patience"
Gus Floropoulos : "thought we would've ripped through 2.47 on jobless claims"
Matthew Graham : "RTRS- US AUG EXPORTS -0.1 PCT VS JULY -0.6 PCT, IMPORTS UNCH VS JULY +1.3 PCT "
Matthew Graham : "RTRS- US AUG TRADE DEFICIT $38.80 BLN (CONSENSUS $39.5 BLN) VS JULY DEFICIT $38.64 BLN (PREV $39.15 BLN) "
Matthew Graham : "RTRS- US JOBLESS CLAIMS 4-WK AVG ROSE TO 348,250 OCT 19 WEEK FROM 337,500 PRIOR WEEK (PREVIOUS 336,500) "
Matthew Graham : "RTRS- US JOBLESS CLAIMS FELL TO 350,000 OCT 19 WEEK (CONSENSUS 340,000) FROM 362,000 PRIOR WEEK (PREVIOUS 358,000) "