It's important to note that a majority of today's movement has arrived BETWEEN the two big instances of economic data as opposed to immediately in their wake. It's equally important to note that all it took for this weakness was for equities markets to hold their ground.
Bond yields are "lifting off" their recent floor without being pushed up by equities (which have recently been more proportionally connected). In other words, bond markets are showing some weakness of their own accord here. It's not the data and not entirely stock-market-related. So movements like those seen in the chart below speak to one of two things: either a consolidation of the recent positive momentum, or an outright shift. Too soon to tell which, and that could continue to be the case until Friday morning after NFP.
Here's a quick play by play of the day so far:
- bond markets opened slightly stronger after a ho-hum overnight session
- ADP data was slightly weaker, but markets didn't do much with it
- As stocks held their ground, bond markets began weakening
- More than half the losses were intact before ISM data, which was stronger than expected
- That made for more volatility than anything, but once resolved, bonds continued into weaker territory.
- Notably, bonds did not follow a swoop to the lows of the day in stocks. This could be a big clue as to the evolution of tradeflows in Treasuries
- MBS are just keeping pace as best they can and their struggles are a good thing on these down days because they're not moving into weaker territory as quickly as Treasuries.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
| MBS || |
97-09 : -0-08
101-16 : -0-06
104-25 : -0-03
| Treasuries || |
0.3117 : +-0.0003
2.6621 : +0.0381
3.6418 : +0.0478
| Pricing as of 2/5/14 12:47PMEST |
Morning Reprice Alerts and Updates
12:09PM : ALERT ISSUED: Back to Lows, This time with Reprice Risk
10:15AM : ALERT ISSUED: Bond Markets at Hit Lows (and Bounce) after ISM Data
9:05AM : Now at Weakest Levels Thanks to Stock Lever
8:35AM : Bond Markets Improve After Slightly Weaker ADP
Live Chat Featured Comments
Matt Hodges : "MG nailed the Day Ahead. I'd suggest that its a must-read today."
Matthew Graham : "RTRS - ADP NATIONAL EMPLOYMENT REPORT SHOWS U.S. EMPLOYMENT INCREASED BY 175,000 PRIVATE SECTOR JOBS IN JANUARY"
Matthew Graham : "RTRS - REUTERS CONSENSUS FORECAST FOR ADP PAYROLL CHANGE FOR JAN WAS FOR INCREASE OF 180,000 JOBS"
Matthew Graham : "RTRS - MARKIT U.S. SERVICES SECTOR FINAL PMI FOR JANUARY AT 56.7 VS FLASH READING 56.6 AND FINAL 55.7 IN DECEMBER"
Corey Leonard : "Surprised we are down this morning. Thought the slight miss may actually help us this morning some. "
Matthew Graham : "Stock lever trumping Econ data"
jason lewis : "why are we seeing this drop?"
Matthew Graham : "stocks, Yen, Bunds, Nikkei, technicals."
Christopher Stevens : "only off .02 in 10YR from yesterdays close"
Matthew Graham : "and CS raises a good point... It LOOKS like a big drop because the y-axis on the charts is narrow."
Hugh W. Page
: "Interesting perspective by Bill Gross this morning in support of your theme JT... http://mndne.ws/N28DIH"
Matthew Graham : "RTRS- ISM NON-MANUFACTURING PRICES PAID INDEX 57.1 IN JANUARY VS 54.7 IN DEC"
Matthew Graham : "that's gonna hurt a bit "
Matthew Graham : "RTRS- ISM NON-MANUFACTURING BUSINESS ACTIVITY INDEX 56.3 IN JANUARY (CONSENSUS 55.1) VS 54.3 IN DEC"
Chip Harris : "New Penn AE told me they retired all I/O programs due to QM. Anyone know how QM would cause this?"
Andy Pada, Jr. : "i/o violates qm"
Constantine Floropoulos : "many banks r still doing I/O"
Barbara Healy : "My understanding was that non-QM loans, such as I/o, could still be originated & were ok with the CFPB (see the "Extra Note" on that CFPB link), but that loan would have to be held as a portfolio loan. Some investors are offering them, some are not. ...or I could be wrong--it's been known to happen."
Ira Selwin : "They can still be originated and are Ok with the CFPB"
Ira Selwin : "CFPB has said non-qm doesn't mean it's a bad loan."