Treasuries were weaker at the start of the overnight session as renewed US/China trade negotiations propelled global equities markets higher.  The hallmark of yesterday's overnight session was a sharp drop in Chinese stock futures which spilled over to US markets throughout the day.  In other words, today was a reversal of yesterday.

Granted, the trade-related news wasn't the only motivation, but it was definitely in play when Chinese equities opened at 9:30pm.  Before that, there were some positive undercurrents in place from the morning's economic data.  An exceptionally and surprisingly weak Philly Fed Index fueled a moderate rally at the that lasted until the 9:30am NYSE Open.

From there, US equities took over as the key guidance-giver for bonds.  Stocks spiked at the open and Treasury yields followed, ultimately threatening to break above the recent highs near 2.90%.  As Chinese after-hours trading wrapped up and US stocks topped out, bonds began calming down.  

10yr yields ended the day nearly unchanged +0.55bps at 2.87%.  Fannie 4.0 MBS, which received less benefit from yesterday's Treasury gains and less damage from today's Treasury weakness, managed to end 1 tick into positive territory at 101-26 (101.80).   Trading was markedly calmer versus the past few days in terms of volume.  That trend could continue tomorrow, depending on news headlines.  It's certainly that time of year with respect to traders tuning out for summer activities.  Lower volume and lighter liquidity can exaggerate imbalances, thus making for bigger, less logical moves.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 4.0
101-26 : +0-01
10 YR
2.8696 : +0.0186
Pricing as of 8/16/18 5:11PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:16PM  :  ALERT ISSUED: Negative Reprice Risk Increasing
11:22AM  :  ALERT ISSUED: Bonds at Weakest Levels; Reprice Risk Considerations
8:57AM  :  Bonds Shed Overnight Weakness After Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Bert Swyers  :  "bonds strong like bull today"
Matthew Graham  :  "Chinese equities futures bounced lower, then closed. US equities topped out. Bonds were taking guidance from both, and were generally willing to hold ground otherwise, due to much weaker econ data this morning."
Bert Swyers  :  "how the heck are we green right now"

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Aug 16
8:30 House starts mm: change (%) Jul 0.9 -12.3
8:30 Building permits: number (ml)* Jul 1.311 1.310 1.292
8:30 Housing starts number mm (ml)* Jul 1.168 1.260 1.173
8:30 Philly Fed Business Index * Aug 11.9 22.0 25.7
8:30 Build permits: change mm (%)* Jul 1.5 -0.7
8:30 Jobless Claims (k) w/e 212 215 213
Friday, Aug 17
10:00 Consumer Sentiment Aug 98.0 97.9
10:00 1yr Inflation Outlook (%)* Aug 2.9
10:00 5yr Inflation Outlook (%)* Aug 2.4
10:00 Leading index chg mm (%) Jul 0.4 0.5