Whereas Friday's big move higher in MBS was all about one undisputed star of the show, and whereas today's Retail Sales report had an opportunity to play a similar role on a smaller scale, the day instead ended up being about an ensemble cast. In fact, the Retail Sales didn't generate much, if anything by way of volatility. If anything, it failed to provide reason for ongoing improvement.
No rate rally wants to get ahead of itself in the exceptionally tough bond-market environment of the past 8.5 months. Just between Thursday and Tuesday, we've covered nearly as much ground as the other examples of major corrections against the longer term trend higher in rates, and all of those had well over a week to develop.
In a way, that could be taken to mean that further recovery is still a possibility, but let's take things one day at a time. For today, the rally hit resistance thanks to a combination of technicals (particularly, 2.84 in 10's, which offered a bounce both yesterday morning and today).
The x-factor between now and then has been the big swings in equities markets. 2.84% in 10yr Treasuries looked like it would hold as resistance until S&Ps set about their biggest sell-off of the year. Stocks and bonds certainly haven't been joined at the hip, but there has been some push and pull.
Today saw stocks pull bond yields back up with another sharp move, but higher this time, erasing most of yesterday's losses. This was joined by tradeflow considerations that saw more supply in the long end of the yield curve (longer-dated Treasuries) and in MBS. More supply = more inherent weakness, all other things being equal.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
| MBS || |
95-24 : -0-16
100-04 : -0-16
103-21 : -0-13
| Treasuries || |
0.3822 : +0.0242
2.8709 : +0.0459
3.8008 : +0.0348
| Pricing as of 1/14/14 4:27PMEST |
Today's Reprice Alerts and Updates
12:58PM : ALERT ISSUED: Negative Reprice Risk Ongoing/Increasing
11:25AM : ALERT ISSUED: MBS hit Lows; Negative Reprice Risk
9:10AM : Retail Sales Leaves bond Markets at Weaker Levels
MBS Live Chat Highlights
Jason York : "with the past 2 days having such a rally, you have to expect a day like this"
Ted Rood : "Just gave back yesterday's gains, nothing serious so far."
Matthew Graham : "RTRS- U.S. FED'S PLOSSER SAYS PREFERS TO END BOND PURCHASES BEFORE LATE 2014 "
Matthew Graham : "RTRS - FED'S FISHER: WILL 'NOT FLINCH' FROM SUPPORTING CUTS TO BOND BUYS EVEN IF STOCKS FALL "
Caroline Roy : "starting out the year slow....emailing and calling everyone on the fence. got any other suggestions?"
Frank Hanna : "CR keep grinding. I am slow too, and many other may be too... SOme of them may give up. THat's why we need to keep pushing and trying."
Jason Anker : "it's slow right now but starting to pick up. "
Jason Anker : "i've been calling around and it's not just me and you TR"
|Time ||Event ||Period ||Actual ||Forecast ||Prior |
|Wednesday, Jan 15 |
|7:00 || Mortgage Market Index || w/e || || || 345.1 |
|8:30 || Producer prices mm (%)* || Dec || || 0.4 || -0.1 |
|8:30 || NY Fed manufacturing * || Jan || || 3.75 || 0.98 |