Bonds sold off clearly and somewhat abruptly following a Bloomberg article on the trade negotiations being in better shape than markets might assume based on the previous day's trade headlines (which were also the biggest market movers of the day).  All of the above completely superseded any potential impact from econ data.  In fact, the big Miss in the ADP employment data had absolutely no effect and a mixed bag in the ISM services data only served for fuel more selling (for potential reasons I discussed in this update).

To paraphrase the update, the "new orders" component of the ISM data is the most forward looking, and traders are interested in the most forward looking data possible right now because none of the current crop of data is going to matter once the trade deal (or lack thereof) has its day.  The only other way to explain the additional weakness after the ISM data would be to say that traders were inclined to sell more aggressively this morning but were waiting to make sure ISM wasn't going to have a strong objection.  That may sound like a bit of a reach, but it's a real thing that happens--no more complicated than waiting for the flop in poker before making your bigger bets.

From here, we really need to ask ourselves on a daily basis how much faith we want to put in econ data as a potential market mover if trade headlines are still the biggest market mover in the room.  Unfortunately, we have to continue to be on the lookout for market movement after data, but also on the lookout for that movement to be counter-intuitive if the trade headline du jour happens to disagree. 

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
101-12 : -0-05
10 YR
1.7740 : +0.0650
Pricing as of 12/4/19 4:28PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:56AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
10:30AM  :  ALERT ISSUED: MBS Now Down an Eighth of a Point From Highs
10:09AM  :  ISM Data Mixed, But Bonds Weaken
8:40AM  :  Almost No Response to Much Weaker ADP Data

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "Figured this would be helpful. Now you can just type "limits" into the help menu search to find this handy link. Please let me know if you see an error, or if something urgently needs to be added: New 2020 Loan Limits (Conventional Conforming and FHA)"
Victor Burek  :  "Goldman: "We lowered our estimate of November nonfarm payroll growth to +180k (vs. +195k previously), reflecting the weaker-than-expected ADP and ISM manufacturing reports""
Matthew Graham  :  "i feel like i need to devote an entire newsletter to explaining and reiterating just what a big and unique deal this trade war business is."
jamie Fitz-Gerald  :  "what changed"

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Dec 04
7:00 MBA Purchase Index w/e 269.4 267.1
7:00 Mortgage Refinance Index w/e 1925.7 2282.2
8:15 ADP National Employment (k)* Nov 67 140 125
10:00 ISM N-Mfg Bus Act * Nov 51.6 56.1 57.0
10:00 ISM N-Mfg PMI * Nov 53.9 54.5 54.7