After slogging up toward (but not over) long-term highs 2 weeks ago, 10yr yields began a waiting game that looked like it would take a cue from last Wednesday's FOMC events.  As bonds rallied coming away from the Fed, there was at least some chance that we'd turned a corner and could start thinking about a more sustained rally.  

Friday afternoon's weakness raised some doubts as to that potential rally, and today's weakness confirmed those doubts.  Bonds are right back in the same  range, holding uncomfortably near the highest levels in 7 years set back in May 2018. 

There were no specific, overt sources of inspiration for today's selling pressure.  Granted, we could point to Canada joining NAFTA 2.0 or another strong reading in ISM Manufacturing (weaker than expected, but still the 4th highest reading in 14 years), but we didn't see any of the telltale signs of a bond market trading based on individual events (concentrated volume and movement immediately following the event).  

That's not really ideal because it means sellers are selling for reasons that go beyond the day-to-day  developments.  This raises questions as to this week's economic data being able to come to our rescue (in the event the data is more moderate compared to previous readings).  

There is no significant data on tap for tomorrow, but Fed Chair Powell is scheduled to speak at noon.  In the meantime, we're keeping a close eye on recent highs near 3.10% and then on long-term highs at 3.126% (10yr yield).  

For their part, MBS fared better than Treasuries today, with Fannie 4.0 coupons only losing 1/32nd (0.03) compared to Treasuries' 0.02% sell-off.  Volume was light overall, which may indicate we have yet to get an accurate sense of October's prevailing momentum.

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
100-29 : -0-01
10 YR
3.0855 : +0.0295
Pricing as of 10/1/18 5:13PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:09AM  :  Weaker ISM Data Not Hurting or Helping so Far

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Jude Bridwell  :  "This day end weakness is not cool"
Sung Kim  :  "friday NFP going to be a field day"
Matthew Graham  :  "not sure about head and shoulders, but double top potential, sure."
Sung Kim  :  "MG - not a big chart pattern guy, but do we have some sort of double top head and shoulders or whatever it is from end May?"

Economic Calendar
Time Event Period Actual Forecast Prior
Monday, Oct 01
10:00 ISM Manufacturing PMI * Sep 59.8 60.1 61.3
10:00 Construction spending (%)* Aug +0.1 0.4 0.1
10:00 ISM Mfg Prices Paid * Sep 66.9 71.0 72.1
Tuesday, Oct 02
9:45 ISM-New York index * Sep 810.7