The story so far today is one of modest correction from last week's losses. To recap that last 3 weeks, bond markets approached their best recent levels as they waited for 10/22 NFP. They broke into even better territory after NFP. Last week's selling took Treasuries a few bps higher than they were before NFP, and today's modest rally takes them right back to levels seen on NFP morning. MBS have fared a bit better with respect to October 22nd levels, but that's a bit misleading considering prices will drop over the weekend due to "the roll."
Long story short, we remain on the edge between the weakest post-NFP levels and the strongest pre-NFP levels. This pans out to roughly 2.59 in 10yr yields and 102-04 in Fannie 3.5 MBS. Today's data and events have done little--if anything to facilitate this. The move was already underway at the open and the Factory Orders data didn't have a noticeable impact on trading levels.
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 11:04 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: Aug Factory Orders Miss; September in line with Consensus
- Sep Factory Orders +1.7 vs +1.7 forecast
- August =0.1 vs +0.3 forecast
- Excluding Transportation, -0.2 in Sep, -0.4 Aug
- Market Reaction: perhaps none. If anything, it's been slightly positive for bond markets so far.
New orders for manufactured goods in September, up
following two consecutive monthly decreases, increased
$8.1 billion or 1.7 percent to $490.8 billion, the U.S.
Census Bureau reported today. This followed a 0.1
percent August decrease. Excluding transportation, new
orders decreased 0.2 percent.
Shipments, up four of the last five months, increased
$0.3 billion or 0.1 percent to $488.9 billion. This
followed a 0.2 percent August increase.
Unfilled orders, up seven of the last eight months,
increased $8.8 billion or 0.9 percent to $1,041.7 billion.
This was at the highest level since the series was first
published on a NAICS basis in 1992, and followed a 0.1
percent August increase. The unfilled orders-to-shipments
ratio was 6.39, up from 6.36 in August.
Inventories, up nine of the last ten months, increased
$2.7 billion or 0.4 percent to $634.0 billion. This was at
the highest level since the series was first published on a
NAICS basis and followed a 0.2 percent August
increase. The inventories-to-shipments ratio was 1.30,
up from 1.29 in August.
Bond Markets Slightly Stronger Overnight; Extending Gains Early
The overnight session was quiet, but positive for bond markets. Treasury activity was limited to futures at first as Japan was out on holiday. European hours brought slightly more activity, but not much movement. Overall, Friday's high 10yr yields held at 2.62+.
10's entered the domestic session at 2.607, but soon fell to 2.596 at the CME open (Treasury futures pit trading). MBS walked in the door a few ticks higher and have added to gains from there. Fannie 3.5s are currently about 4 ticks higher on the day at 102-05.
There has been no significant data so far this morning, and the data on tap is limited in its market moving potential. There will be two separate instances of the Factory Orders report at 10am as the delayed report from the shutdown is simply being released with today's regularly scheduled report.
Beyond that, volumes are light and the first potential technical roadblock is already in play at 2.596. 10's have bounced there twice so far this AM. 102-08 would be the analogous level for MBS.
Live Chat Featured Comments
Nate Miller : "bw try http://mwfwholesale.com/ "
Matthew Graham : "Use the search page Brian, and when you see a question that looks like it could have yielded answers you'd find informative, click on the "view comment in chat log" to see the surrounding chat. Let me know if this doesn't make sense."
Brian Wiechman : "gm gents and ladies....anyone advise where to find a home for a manufactured, semi perm found, owned land not leased, here in CA...Realtor mentioned California Pacific Bank? thanks for advice!"
Matthew Graham : "RTRS- U.S. SEPT FACTORY ORDERS +1.7 PCT (CONSENSUS +1.7 PCT) VS AUG -0.1 PCT "
Jeff Anderson : "GM, all. Nice Day Ahead, MG. I saw the estimates for NFP on Friday. Seems low and like we're getting set up to get smushed. Hope I'm wrong."
Ira Selwin : "Also, those are the "highlights" - the full 302 pages is here - http://portal.hud.gov/hudportal/documents/huddoc?id=sfh_draft_ae.pdf"
Matthew Graham : "I'd agree GR. I'd also agree with JA about fixing flaw. The fact that rate or term reduction hadn't been NTB's was frustrating for some borrowers/LOs. "
Jason Anker : "seems like they may be fixing a flaw but I dont want to get too far ahead of myself, it's HUD after all"
Jason Anker : "bc the old rule would squash a 30 to 15 yr refi in some cases. It has for me and it's not fair to the borrower"
Gaius Rossini : "http://portal.hud.gov/hudportal/documents/huddoc?id=sfh_draft_chgs.pdf"
Gaius Rossini : "is the proposed NTB change on FHA streamlines significant?"
Gus Floropoulos : "The week ahead was a perfect read"
Oliver Orlicki : "rushmore apparently let go a bunch as well"
John Rodgers : "Anyone hearing any news on 53rd wholesale? Longtime local rep just sent a email indicating that she has been let go. "