With the exception of the wee hours yesterday morning, the past 2 days have been all about the trade deal.  Markets knew Trump and the Chinese vice premier would be meeting this afternoon and they increasingly believed some sort of trade announcement was likely.  In fact, both stocks and bonds did such a good job getting ahead of such a thing that they moved in counter-intuitive directions as soon as it was announced.  You know... buy the rumor, sell the news, and all that...

While you know I'd be the first in line to say too many words about something that happens in financial markets, today was really that simple.  In short, it was 2nd day of stocks and bonds pricing in some announcement of progress in US/China trade relations.  In that context, the bond losses are reasonable (more than reasonable, really).

In fact, bond losses are so mild relative to the news that we may well wonder what next week will look like.  The outlook is complicated by the fact that it's a 3-day weekend.  We tend to think of that as being a reason for bond traders to err on the side of caution (i.e. maybe buyers will be more confident on Tuesday).  But what if it's a similar story for the stock market?  In other words, what if stocks would have been more willing to gain more ground if not for the uncertainty created by a 3-day weekend?  Either way, the first 2 business days of next week matter greatly to the near-term outlook for both sides of the market.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
101-05 : -0-07
10 YR
1.7430 : +0.0870
Pricing as of 10/11/19 6:10PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
4:31PM  :  Bonds Improve After Trade Deal Announcement
10:21AM  :  ALERT ISSUED: Negative Reprices Becoming More Likely
9:24AM  :  ALERT ISSUED: Bonds Back to Weakest Levels; Very Slight Reprice Risk

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matt Hodges  :  "we already took the hit and frankly this deal sounds weaker than anticipated."
Ted Rood  :  "Have you seen the last two days' action, PL?"
Rob Downs  :  "Already priced in?"
Peter Lassig II  :  "Why aren't we selling off more than we are? It seems like this should be brutal for rates."
Matthew Graham  :  "We never want to believe in a big picture bounce until we're halfway up to the next long-term high. Just make sure you're not expecting too much from the bond market in terms of its ability to perpetually rally."
Matthew Graham  :  "it does until you consider the stat I mentioned earlier about the last 2 times 1yr yields moved back up after breaking below 1.50%"
Edgar Winter Is Coming  :  "Moving from 1.55% to mid 1.75% in two days seems a bit over done if what Sr. MBS Reporter VB posted earlier is true."
Sung Kim  :  "the devil is in the details..."

Economic Calendar
Time Event Period Actual Forecast Prior
Friday, Oct 11
8:30 Import prices mm (%)* Sep 0.2 0.0 -0.5
8:30 Export prices mm (%)* Sep -0.2 0.0 -0.6
10:00 1yr Inflation Outlook (%)* Oct 2.5 2.8
10:00 5yr Inflation Outlook (%)* Oct 2.2 2.4
10:00 Consumer Sentiment Oct 96.0 92.0 93.2
Monday, Oct 14
0:00 Columbus Day *