Bond markets had been setting up for the extended weekend by being cautious about getting caught on the wrong side of this week's trade.  Consider the following factors:

  • A perpetual trend toward lower yields in 2014
  • Another more clearly-delineated trend lower in July/Aug
  • Geopolitical flare-ups in full force
  • An ECB meeting that might produce new news on QE

With these in mind, the bigger risk for bond market participants was that they wouldn't be set up for rates to go as low as they might keep going this week.  Long story short, there may well have been some excess positivity in bond markets heading into the weekend.  It's not an oversimplification to think of this like a fighting force raising defenses for an attack that never comes and then lowering those defenses.

This theme was all the more noticeable as the day's only significant economic data failed to generate much of a response.  Certainly, the reaction to the data was almost imperceptible compared to the overnight move in Treasuries.

MBS have been even less affected by the overall bond market weakness.  Fannie 3.5s are still holding above last Tuesday's weakest levels while 10yr yields have broken through theirs.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
99-07 : -0-11
FNMA 3.5
102-23 : -0-08
FNMA 4.0
105-26 : -0-05
Treasuries
2 YR
0.5280 : +0.0360
10 YR
2.4090 : +0.0640
30 YR
3.1560 : +0.0710
Pricing as of 9/2/14 12:53PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:14AM  :  Moderately Weaker After Strong ISM Manufacturing and Construction Data
9:23AM  :  Bond Markets Much Weaker Overnight as Month-End Defenses are Lowered

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Justin Dudek  :  "if value comes in higher, some borrowers would prefer to raise sales price to increase seller concessions"
Daniel Kramer  :  "actually a sales price can change after appraisal, if it is to lower the sales price because the value came in lower. just cant raise it. "
Matthew Graham  :  "RTRS- MARKIT U.S. MANUFACTURING SECTOR FINAL PMI FOR AUGUST 57.9 AT VS FLASH READING 58.0 AND FINAL 55.8 IN JULY"