Today was all about the European Central Bank's surprisingly bond-friendly announcement and press conference.  Considering markets already expected (and had largely priced-in) a friendly ECB day, The fact that the ECB was able to deliver a rally-worthy release is impressive.  

The details check out. 

  • They said rates would stay low at least through 2019
  • They unveiled new targeted loans, as rumored several days ago
  • They revised growth/inflation forecasts sharply lower
  • Draghi said near-term growth outlook was weaker than expected and that risks are tilted to the downside
  • Draghi said inflation is likely to decline later this year

Between the 7:45am ET announcement (official text) and the 8:30am Draghi press conference, European bonds had a friendly double whammy that dropped yields to the lowest levels in more than 2 years.  All this after looking as if they might be trying to bounce higher as of the end of last week.  

US bond markets were happy to follow at a safe distance.  As always, Treasuries were more able to benefit than MBS.  Even then, recent ranges went unchallenged.  Tomorrow's NFP (jobs report) could change that, but it would need to come in quite a bit lower than last time to fall under the already tepid 180k forecast (that's "tepid" in the context of recent readings, mind you...  180k is a great NFP number in general).

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.5
100-12 : +0-09
10 YR
2.6410 : -0.0510
Pricing as of 3/7/19 4:46PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
8:52AM  :  Bonds Rallying on Dovish ECB

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Chris Pater  :  "I'll go against the grain and say... I think we'll have one more run up before March 20th.. after FOMC announcement is when I think we'll see the real drop... it's all guess work though, some are just luckier than others"
Matthew Graham  :  "for the record, I'm only speaking in intraday terms. Tomorrow is NFP, so overnight, YMMV"
Oliver Orlicki  :  "MG is on the boat"
Matthew Graham  :  "not much reason to lock right now (can't think of any really... unless you can't lock later today for whatever reason)"
Oliver Orlicki  :  "I would wait"
Gavin Luckman  :  "I'm about to lock one, so as soon as I submit the lock, we'll reprice. I got you guys."
Ryan Ford  :  "now if lenders will just pass along the gains before NFP tomm..."

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Mar 07
8:30 Productivity Revised (%) Q4 1.9 1.6 2.2
8:30 Labor Costs Revised (%) Q4 2.0 1.6 1.2
8:30 Continued jobless claims (ml) w/e 1.755 1.775 1.805
8:30 Jobless Claims (k) w/e 223 225 225
Friday, Mar 08
8:30 Average earnings mm (%) Feb 0.3 0.1
8:30 Non-farm payrolls (k)* Feb 180 304
8:30 Unemployment rate mm (%)* Feb 3.9 4.0
8:30 Building permits: number (ml)* Jan 1.289 1.326
8:30 Build permits: change mm (%)* Jan 0.3
8:30 House starts mm: change (%) Jan -11.2
8:30 Housing starts number mm (ml)* Jan 1.197 1.078
10:00 Wholesale inventories mm (%) Jan 0.3
10:00 Wholesale sales mm (%) Jan -0.2 -1.0