In the amusement park that is financial markets, each asset class has a few favorite rides.  When the place is packed, it's tough for any given asset class to take too many turns on any given ride within a certain amount of time.  A big old rally is the bond market's favorite ride, but an ample supply of warm bodies at trade desks often serves to limit how often they can take that ride without good reason.  

But the theme park was much less crowded today as warm bodies are increasingly out of the office for an extended weekend thanks to an early close tomorrow and full closure on the 4th.  Shorter lines means those left in the park have their run of the place.  Even if this wasn't the underlying motivation for today's gains, it definitely made those gains bigger than they otherwise would be (see this primer for more background).

Underlying motivation is a tough sell today because the best case to be made is for Bank of England president Carney's dovish speech.  The catch is that British markets reacted to that speech almost completely before US Treasuries even began to move in the same direction.  So sure... if you step back far enough to ignore the minute-to-minute comparisons, you might conclude that Treasuries were led lower by British yields, but it's really hard to prove that scientifically once the microscope gets involved.

Either way, none of the gains changed the bigger picture, wherein yields have been range-bound between the same highs and lows since Fed day (June 19).  That will likely change after Friday's NFP if not by tomorrow afternoon.  If it changes tomorrow, however, it would require ADP and ISM to come out weaker than expected.  Otherwise, yields would likely retreat back into the prevailing range to wait for NFP on the other side of the holiday.


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 3.0
100-29 : +0-08
Treasuries
10 YR
1.9770 : -0.0560
Pricing as of 7/2/19 4:54PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:31AM  :  At Best Levels After Central Bank Comments

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Rob Downs  :  "Agreed - just think we're not going to get as much as we're use to with these moves in T's in advance of a long wknd - mileage varies of course."
Matthew Graham  :  "RTRS - FED'S MESTER - VERY IMPORTANT FOR FED POLICYMAKERS NOT TO BE DRIVEN BY SHORT-TERM POLICTICAL CONSIDERATIONS"
Matthew Graham  :  "RTRS - FED'S MESTER - A FURTHER DECLINE IN INFLATION WOULD BE PROBLEMATIC"
Matthew Graham  :  "RTRS - THE MARKETS HAVE PRICED IN RATE CUTS AND DON'T WANT TO DISCOUNT THAT SIGNAL, BUT MARKETS ARE NOT ALWAYS RIGHT - FED'S MESTER"
Matthew Graham  :  "we'll definitely get reprices"
Dominick Cordone  :  "the fact this is even happening is pretty wild IMO. I bet we get -1 reprice regardless"
Rob Downs  :  "Especially in advance of an extended wknd with NFP on Friday when a lot of lock desks are going to be closed."
Rob Downs  :  "Pipeline control. There's little incentive for lenders to continue to cut rate. We're not going to see the rate improvement we're use to w/ drops in treasury yield."
David Rudnick  :  "pricing should be at its absolute best at this time right.... but it isnt. I feel like lenders are bait/switching rates regardless of where the market is"

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Jul 03
7:00 MBA Purchase Index w/e 266.3
7:00 Mortgage Market Index w/e 518.7
8:15 ADP National Employment (k)* Jun 140 27
8:30 International trade mm $ (bl) May -54.0 -50.8
8:30 Jobless Claims (k) w/e 223 227
10:00 ISM N-Mfg Bus Act * Jun 60.0 61.2
10:00 ISM N-Mfg PMI * Jun 55.9 56.9