After weakness pervaded the past two sessions, bond markets have managed to find their footing before giving back any more of last Thursday's Ukraine-inspired improvement. It was geopolitical risk that once again helped nudge trading levels out of their narrow morning range as the morning's domestic economic data was a non-event (flat CPI and mixed Housing Starts data).
MBS specifically, made up for some underperformance yesterday. Fannie 4.0s are heading out just over yesterday morning's highs while 10yr yields haven't come close to their best levels of the day yesterday. 10's particularly, look to have tradeflow considerations resulting in technical levels at 2.67, which blocked further descent in the afternoon. That said, there's also 2-day support overhead now at 2.70.
Apart from geopolitical considerations, there's the matter of tomorrow's FOMC Announcement. While market participants don't really see any chance of deviation from the tapering plan, there is broad-based anticipation that the Fed will change the forward guidance (the "if's and then's about the future policy path) to focus more on qualitative ideas and less on volatile unemployment rates. A move in that direction is assumed to be more bond-market-friendly than not, and that could account for some of today's positivity as well.
All that having been said, we don't really have to account for today's gains by connecting dots to individual cause & effect relationships. Instead, it's enough to simply note that this is typical behavior for bond markets when pulling back from a reasonably sharp rally (i.e. there are 1-3 days of a corrective bounce followed by a smaller correction ending the bounce). Today is that smaller correction and the implication is a bigger move into the 2nd half of the week.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
| MBS || |
96-26 : +0-09
101-00 : +0-08
104-13 : +0-07
| Treasuries || |
0.3507 : -0.0123
2.6722 : -0.0248
3.6128 : -0.0172
| Pricing as of 3/18/14 4:05PMEST |
Today's Reprice Alerts and Updates
12:48PM : Positive Reprice Potential More Developed as MBS hit Highs
9:02AM : Bond Markets Unchanged After Morning Data, Putin Parliament Speech
MBS Live Chat Highlights
Scott Rieke : "Chase is buying the jumbo market today."
Clayton Sandy : "Best rate at 780 credit"
Jason Anker : "yea 4.125 is out there today"
Matthew Graham : "RTRS - WHITE HOUSE VOWS MORE ACTIONS AGAINST RUSSIA OVER UKRAINE, SAYS MORE DESIGNATIONS TO COME UNDER SANCTIONS ORDER"
Matt Hodges : "next, we'll take away their cell phone for a whole week"
Brent Borcherding : "Man, it's a scary day when you have to come to the realization that just verbalizing hollow threats holds no weight anymore. Currently our men in charge haven't quite come to that realization, though."
Frank Hanna : "Anyone know the Transfer tax in Brockton Mass?"
Jeff Anderson : "Seller pays in MA, FH. I think it's 4.56 per thousand? Or around there."
Gary Bracht : "RE: Putin, and our elected officials reminds me of the Gary Larsen cartoon with the guy sitting in his easy chair talking to his dog and all the dog hears is "Blah Blah Blah Blah" I agree that Putin doesn't care what we say and all of our "threats" are so hollow he's not feeling any risk to proceed further and establish an additional Russian state"
Robert Rippy : "If we had signed a treaty with the Ukraine then we have an obligation to live up to our word. To my knowledge we did not sign any treaty to protect them. The recent vote should be tossed and a new vote monitored by the United Nations to make sure the will of the people is enforced would be a better plan of action."
Scott Ward : "In 1991 the newly independent Ukraine had the third largest strategic nuclear weapons arsenal in the world. Larger than those of Britain, France, and China combined. On June 1, 1996 Ukraine became a non-nuclear nation when it sent the last of its 1,900 strategic nuclear warheads to Russia for dismantling. In return for giving up its nuclear weapons, Ukraine, the United States of America, Russia, and the United Kingdom signed the 1994 Budapest Memorandum on Security Assurances, pledging to respect Ukraine territorial integrity."
Gus Floropoulos : "Having LO's share referrals in this forum is an example of the strength of our community here!"