It was a big, bad day for the bond market, although the size of the thing ended up getting pared down just a bit in the afternoon.  Chalk that up to a counterpoint headline that pushed back against the narrative created by the day's previous headlines.  

The narrative in question concerns the US/China trade pact.  Most recently, the notion of rolling back previously announced tariffs has taken center stage.  Overnight headlines set the tone with China's Commerce Minister saying the two countries had agreed to cancel tariffs in different phases.  Similar headlines from the White House added to the same momentum during the AM trading hours. 

Combine that with a bond market that was already on edge in terms of the technical landscape (you know... all that stuff I've been talking about with respect to 2019 being a really old, really big bond rally that was increasingly likely to face big-picture resistance) and momentum was compounded enough to get yields all the way up to 1.973 at their weakest levels.

After the biggest, nastiestest, most capitulatory spike of the day, bond buyers were already stepping in to stop the bleeding ahead of the 30yr bond auction.  This was one of the few genuine moments of solace.  From there, the auction was decent enough to avoid suggesting a quick return to the day's weakest levels.  Nonetheless, bonds were starting to drift in that direction until the counterpoint headline mentioned above.

EVEN AFTER the boost from that headline, bonds still closed the day well over the 1.90% ceiling that we've been hoping no to break for the past few months.  Some well-respected analysts and strategists think this move is overdone from a technical standpoint (they're even talking about catching falling knives after today), but I continue to view the burden of proof for a friendly bounce to be quite high.  It's going to take a bigger rally than we saw last week, and that's not really something that has a chance to materialize in a reliable way until after the coming 3-day weekend.


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
100-30 : -0-13
Treasuries
10 YR
1.9290 : +0.1170
Pricing as of 11/7/19 6:19PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:21PM  :  Decent Rebound as Trade Headlines Are Questioned
12:39PM  :  ALERT ISSUED: When 3 Reprice Alerts Isn't Enough
10:53AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
9:10AM  :  ALERT ISSUED: MBS At Lows; 10yr Approaching 1.90%
8:21AM  :  ALERT ISSUED: Bonds Blasted Overnight By Trade Headlines

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Sung Kim  :  "hey - great news, odds of rate hike next year increased to 50% LOL"
Matthew Graham  :  "if you haven't seen a negative reprice yet today and pricing isn't half a point worse, lock"
McKay Platt  :  "Time to close the office for the day....."
Matthew Graham  :  "If I had to venture a guess, official announcement would create more selling I think."
Matthew Graham  :  "looks like the bounce is already starting"
Matthew Graham  :  "or at least traders are saying enough is enough to the selling"
Matthew Graham  :  "depends on the client. Losses this big increase temptation to float and hope for a small pickup even if the broader trend remains painful"
Dave Pressel  :  "And cue the "OK, I was waiting for rates to go lower but I am ready to lock at the rate we chatted about 2 weeks ago" calls...."
Ted Rood  :  ""I dreamt MBS were down 24, it was horrible.""

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Nov 07
8:30 Jobless Claims (k) w/e 211 215 218
13:00 30-Yr Bond Auction (bl)* 19
Friday, Nov 08
10:00 Wholesale inventories mm (%) Sep -0.3 -0.3
10:00 Consumer Sentiment Nov 95.9 95.5
10:00 5yr Inflation Outlook (%)* Nov 2.3
10:00 1yr Inflation Outlook (%)* Nov 2.5