Trade-related headlines continued to be all the market cared about for one final day this week. They went both ways, but by the end, it was clear we'd been hoodwinked into paying too much attention to a process that is destined to be ongoing and nuanced.

The day wasn't without hope, however.  The morning hours even saw an attempt to hit the most panicked levels of the week with respect to the trade war (i.e. low bond yields and stock prices), but both bounced after trade talks wrapped up with no dramatic fireworks.  A few hours later, Trump confirmed that we're looking at an ongoing, constructive process between two countries that have a strong relationship.

COULD HAVE FOOLED US FOR THE LAST 4.5 DAYS!

C'est la vie.  That's the nature of watching market movement as closely as we do.  It's no small consolation that volumes and volatility were incredibly elevated this week (in other words, we weren't watching any more closely than conditions suggested we should).  

From here, the most obvious risk is that markets return to their previous ranges.  In fact, that risk is so obvious at this point that it wouldn't be a surprise to see a contrarian trade early next week where a few traders with deeper pockets attempt to take advantage of lopsided short positions by trying to start a short-covering snowball.  Not the kind of thing to plan on, but one to hold out hope for anyway.


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 3.5
101-01 : +0-01
Treasuries
10 YR
2.4730 : +0.0160
Pricing as of 5/10/19 5:45PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:28PM  :  ALERT ISSUED: Negative Reprice Risk Increasing
9:27AM  :  Limited Reaction to CPI Data Despite Volume Spike

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "
MBS Live Alert Issued
Negative Reprice Risk Increasing"
Matthew Graham  :  "TRUMP SAYS TARIFFS MAY OR MAY NOT BE REMOVED DEPENDING ON WHAT HAPPENS IN FUTURE NEGOTIATIONS"
Matthew Graham  :  "TRUMP SAYS TALKS WITH CHINA WILL CONTINUE INTO THE FUTURE"
Matthew Graham  :  "TRUMP SAYS HIS RELATIONSHIP WITH PRESIDENT XI REMAINS A VERY STRONG ONE"
Matthew Graham  :  "TRUMP SAYS U.S.-CHINA TALKS WERE CANDID AND CONSTRUCTIVE"
Matthew Graham  :  "best response on twitter: "Is your source some Huawei devices?""
Matthew Graham  :  "most recent market mover is apparently a tweet from the head of some chinese tabloid, to wit: "I learned from authoritative source that China-US trade talks didn't break down. Both sides think that the talks are constructive and will continue consultations. The two sides agree to meet again in Beijing in the future.""

Economic Calendar
Time Event Period Actual Forecast Prior
Friday, May 10
8:30 Consumer Price Index (CPI) (%)* Apr 0.3 0.4 0.4
8:30 Core CPI (Annual) (%)* Apr 2.1 2.1 2.0