Morning trading was a linear and logical continuation of yesterday's rally. That's not to say bond markets were obviously destined to rally yesterday--simply that Jobless Claims got out of the way and there was a bit more room to run to technical boundaries.
Breaking those technical boundaries (specifically, 2.57 in 10yr yields) proved too tall an order today. The first bounce in the high 2.56's around 9am was a warning sign, but when the 10am Philly Fed Index came in stronger than expected, it was game over for any potential breakout attempts.
Both stocks and bonds underwent some sort of unified panicky reaction to Obama's podium tardiness with this afternoon's address on Iraq. They both subsequently calmed down, and MBS actually returned to the levels from just before the sell-off. It's not out of the question that the 30yr TIPS auction at 1pm created some of the weakness in bond markets, but unlike conventional auctions, there's no overt cause&effect when it comes to TIPS (because of their inherently contradictory nature--i.e. weak demand for inflation protection is positive for bonds, but weak demand for Treasuries in general is negative for bonds).
MBS ultimately ended just barely in negative territory on the day with Fannie 3.5s down 2 ticks at 102-06. 10yr yields held the recent range, heading out at 2.62.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
| MBS || |
97-32 : -0-05
102-06 : -0-02
105-16 : +0-00
| Treasuries || |
0.4517 : -0.0243
2.6206 : +0.0056
3.4660 : +0.0460
| Pricing as of 6/19/14 5:10PMEST |
Today's Reprice Alerts and Updates
12:19PM : ALERT ISSUED: Negative Reprice Risk Moves to DEFCON 2
11:40AM : ALERT ISSUED: Incremental Increase in Reprice Risk as MBS Approach Lows
10:39AM : ALERT ISSUED: Bond Markets Weakening after Philly Fed, and Technical Resistance
9:26AM : 10yr Testing 2.57 Boundary on Post-Fed Momentum
MBS Live Chat Highlights
Victor Burek : "with as much as lenders took away with these reprices, it sure seems like they could all reprice better now"
Al Jones : "I would not be surprised if we got another mid-day price for better from a few.. just don't see us breaking out to the upside right now or outside this trading range. my 2cents :) "
Victor Burek : "its not as bad as it looks, just testing top of range again...we will bounce back lower"
Matthew Graham : "here's my best guess on the market movement: original speech was scheduled for 12:30pm. Then it was pushed back to 1:15pm, As 1:15pm approached with no sign up POTUS, markets got nervous. The sharpest move to cash was at 1:16pm in both stocks and bonds. Not the most triumphant conclusion, but possibly a factor if we don't learn/find anything better."
Chris Hooker : "All this current volatility due to pending Obama speech?"
Victor Burek : "Obama to speak in 15 minutes on Iraq, was supposed to be at 1230 but delayed for some reason"
John McClellan : "Just had a realtor call me and and say 'stated income loans are back" huh?"