Yesterday marked a fairly big adjustment in the Fed's monetary approach to the same old underlying economic realities that were in place at the time of their last meeting.  Granted, we have had the government shutdown come and go in the intervening time, but that's about it, and the Fed said they don't expect any lasting GDP impact there.

So while the Fed CAN move markets because it's acting as some sort of bellwether for underlying economic realities (i.e. "if the Fed's worried, I'm worried too!), in this case, the Fed is moving markets simply because it changed the lens through which it's viewing those economic realities and this lens is much friendlier for both sides of the market. 

If traders were genuinely viewing the Fed announcement as a wake-up call about economic risks, stocks would have a tougher time making the gains we're seeing.  That's not to say there aren't valid underlying economic uncertainties, but those can only be sorted out with the arrival of new economic data.  

With that in mind, we get the most important economic data of the month tomorrow morning in the form of the jobs report.  Given the nature of the current market reaction (i.e. the fact that it's based on the Fed's lens and not what the Fed is actually looking at), what the Fed is actually looking at stands a bigger-than-average chance to set the tone for the next move.  That makes tomorrow morning risky--especially because it would stand to reason that traders could likely overlook a certain amount of NFP weakness due to the uncertain impacts of the government shutdown.

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
102-11 : +0-05
10 YR
2.6330 : -0.0620
Pricing as of 1/31/19 5:34PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:04AM  :  Bond Traders Show Hands After Strong Home Sales Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "I want to be ahead of the next big shift just as much as anyone else, but there are too many unresolved questions to take that risk just yet. Now, of course if things stay stupid in Washington and econ data trickles back in looking tired and depressed, the sky's the limit"
Chris Pater  :  ""Pigs get fat. Hogs get slaughtered" I think is the expression - Fed did us a big favor, but trade deal could take a bite out of that, or all of it"
Brent Borcherding  :  "That man deserves a like!"
Matthew Graham  :  "yeah, I agree with BB on this one. Fed seemed to come out of left field yesterday. We can't trust the data for a month or two, and after that, there's a big enough risk that the economic cycle continues at least for a little bit. We're one surprisingly conciliatory trade announcement away from 2.8%."
Hugh W. Page  :  "Just got my first email in a long time from a locked borrower wanting a lower rate since, "rates are dipping more". Love those."
Spencer Packer  :  "Add to this the incredible 4 day streak we're on. I'm cautious like Brent."
Brent Borcherding  :  "Really? A ridiculous number would be needed? Is that because there is so much data that supports this relatively massive move lower?"
Oliver Orlicki  :  "My boat is going to float. We would need a ridiculous # tomorrow to sell off"
Bert Swyers  :  "im locking today, but wonder if NFP even moves the market tomorrow unless its truly gangbusters"
Matthew Graham  :  "Joel: Mortgage rates are determined by mortgage lenders based on several "ingredients." The key ingredient is market-driven prices of bonds. Prices move inversely with yields, and yield is another word for "rate." As such when yields are moving lower in the bond market (which includes things like the US 10yr Treasury), mortgage rates tend to fall as well. There are too many variables affecting bond market movement and they change enough that it doesn't make sense to rank or list too many of them. In general, however, a stronger economy and higher inflation contribute to rising rates. An often-overlooked factor is the extent to which the US government is issuing debt (aka borrowing money/increasing the deficit). More debt = more bonds to sell = lower bond prices = higher bond yields = higher interest rates. This explains the underlying concept behind the MOVEMENT in rates overall. From there we can talk about how mortgage rates differ from other rates if your clients are interested."

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Jan 31
8:30 Jobless Claims (k) w/e 253 215 199
9:45 Chicago PMI * Jan 56.7 61.5 65.4
10:00 New home sales chg mm (%)* Nov +16.9 2.9 -8.9
10:00 New home sales-units mm (ml)* Nov 0.657 0.560 0.544