Most of the month of October was rotten for the bond market.  Material progress on the trade deal, a leveling-off of economic data deterioration, and fears about a major shift in the Fed's policy stance all did damage (among other things).  Now in the past 2 days, we have a slightly less sinister take on the Fed, the trade deal being called into question, and a new cause for concern in one of the "early indicator" economic reports (today's Chicago PMI).  

Overnight gains came swiftly on the trade deal headlines and bonds didn't seem shy about maintaining the improvement heading into the domestic session, even as the stock market began to retrace its concomitant move.  When PMI hit, bonds were off to the races again and technical follow-through did the rest of the heavy lifting.  With that, yields were down nearly 20 bps in 3 days and Fannie 3.0 MBS added nearly an entire point trough to peak.

Tomorrow brings the typically important jobs report, and a deceptively important ISM Manufacturing report (which could paradoxically be the big market mover of the day).  Reason being, when we talk about Chicago PMI being an advance indicator for other data, the ISM Manufacturing PMI is one of the first reports that comes to mind.

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
101-20 : +0-09
10 YR
1.6870 : -0.1090
Pricing as of 10/31/19 5:57PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:51AM  :  Bond Surge Continues After Chicago PMI
8:18AM  :  FYI on Overnight Gains

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "I know... The rally was just OK, but that costume thing..."
Sung Kim  :  "WOW - what a day! :)"
John McClellan  :  "you have arrived!"
Matthew Graham  :  "i mean once people are wearing a halloween costume of you or your company, you've basically arrived."
Matthew Graham  :  "Probably the biggest honor ever, seriously"
John McClellan  :  "hey Matt.. one of my loan officers dressed up as your Dash board for halloween"
John McClellan  :  "View YouTube Video"
Matthew Graham  :  "So as you allude to, this implies asymmetric risk heading into tomorrow in that sense. It is offset, however, by the fact that labor market strength isn't a surprise in this market, and big beats haven't done a ton of damage to bonds recently."
Matthew Graham  :  "The UAW strike is really the only reason I've even heard mentioned behind the low forecast, but I have yet to see any compelling case to be made regarding the relative impact on the bottom line number. One would think that other labor market metrics would be showing something similar, but they're not."
Joel Marks  :  "When was the last time the NFP forecast was this low and why is it? Last October was the 2nd highest of the past 12 months. Seems like they're grading on a serious curve as far as "beating expectations.""
Hugh W. Page  :  "Just got back from a Realtor Lunch and Learn I did where I was twice told, "I see that they dropped the mortgage rates again!" I guess I know what my next lunch and learn will be about :)"

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Oct 31
8:30 Core PCE Inflation (y/y) (%)* Sep +1.7 1.7 1.8
8:30 Jobless Claims (k) w/e 218 215 212
9:45 Chicago PMI * Oct 43.2 48.0 47.1
Friday, Nov 01
8:30 Non-farm payrolls (k)* Oct 89 136
8:30 Unemployment rate mm (%)* Oct 3.6 3.5
10:00 ISM Manufacturing PMI * Oct 48.9 47.8
10:00 Construction spending (%) Sep 0.2 0.1