To reiterate a point made in the mid-day commentary, it's important to note that bond markets were weaker today WITHOUT the same sort of motivation recently seen/required from equities markets. In other words, most any recent rally has been accompanied by stock market weakness and vice versa for sell-offs. But today's selling didn't see an especially detectable amount of strength in stocks.
That's probably OK as it could just be how bond markets are managing their pre-NFP consolidation. The only reason to fear it would be if NFP offers no solace to bond markets. But if you have that fear, today was as good a day to lock as any, at least before the reprices, and there were quite a few.
Weakness kicked into higher gear in the afternoon and in many ways, was 'MBS-specific.' While Treasuries did more to ease into their weakness, MBS moved in fits and starts, with notable underperformance in the second half of the day.
There's clearly some concern that the great bond market correction of early 2014 is just that--a correction. But those who feel there's more correcting to do (lower in rate) are clearly still around. They won't likely admit defeat unless NFP is strong, with solid revisions.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
| MBS || |
97-03 : -0-14
101-11 : -0-10
104-22 : -0-06
| Treasuries || |
0.3157 : +0.0037
2.6711 : +0.0471
3.6494 : +0.0554
| Pricing as of 2/5/14 5:08PMEST |
Today's Reprice Alerts and Updates
3:23PM : ALERT ISSUED: Incremental Increase in Reprice Risk; New Lows For MBS
3:04PM : ALERT ISSUED: Slight Negative Reprice Risk Persists; Bouncing Along Lows
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
MBS Live Chat Highlights
Jeff Anderson : "That's a great chart, CS. But no, the talking heads on TV say we're in a historically low interest rate level so current rates shouldn't effect refi's or purchase decisions."
Matthew Graham : "RTRS - U.S. FED'S PLOSSER URGES SHARPER CUTS TO ASSET PURCHASES, END TO PROGRAM BEFORE MID-YEAR"
Matt Hodges : "lol... thanks for the humor"
Matthew Graham : "RTRS - FED'S PLOSSER, CITING COMMUNICATIONS PROBLEMS, WANTS QE ENDED BEFORE U.S. UNEMPLOYMENT REACHES 6.5 PERCENT"
Matthew Graham : "and the punchline:"
Matthew Graham : "RTRS - FED'S PLOSSER: LABOR MARKET IMPROVING RAPIDLY, INFLATION HAS STABILIZED"
Matt Hodges : "ROFL"
Joseph Daquino : "LOL"
Tim McNerney : "rapidly? in what capacity? I want what he is having!"
Jeff Anderson : "A couple of union guys I'm friends with just got laid off for a few weeks. Hadn't been laid off in years and said things were slowing down."
Matthew Graham : "RTRS - FED'S LOCKHART SAYS REASONABLE TO EXPECT TAPERING TO CONTINUE AT CURRENT PACE, WITH ASSET PURCHASES WOUND DOWN BY Q4"
JASON DOSHI : "20 yr and 10 yr got worse by 70 to 100 bps...any thoughts??"
Samir Dedhia : "Yes, they've all gotten worse by that much...Dont know why though"
Samir Dedhia : "Hey Matthew, were you able to find out anything on the 20 year fixed and 10 year fixed? I've been researching, but havent found anything"
Matthew Graham : "not at first glance"
Matthew Graham : "But when we're talking about these smaller-run issuances, given the size and the composition of MBS investors, these things can easily be a matter of one or two bigger players changing things up or simply being snowed in at home."
Matthew Graham : "It's not the same sort of a market as, say, Treasury futures where if a couple hundred thousand contracts don't get bought, someone (or something) else won't step in and pick up the slack."
|Time ||Event ||Period ||Actual ||Forecast ||Prior |
|Thursday, Feb 06 |
|8:30 || Labor costs Revised (%) || Q4 || || -0.5 || -1.4 |
|8:30 || Productivity Revised (%) || Q4 || || 2.5 || 3.0 |
|8:30 || International trade mm $ (bl)* || Dec || || -36.0 || -34.3 |
|8:30 || Initial Jobless Claims (k)* || w/e || || 335 || 348 |