Bonds were leading off in a slightly friendly direction during the overnight session, largely because we hadn't really heard from China with respect to yesterday's trade deal drama.  Nonetheless, it seemed like more concrete steps were being taken, so markets were willing to move in a risk-on direction (better for stocks, worse for bonds) in general.

The whole "not hearing from China" thing was validated right out of the gate with headlines suggesting China had concerns about US agricultural purchase requirements.  Shortly thereafter, Trump tweeted harsh criticism for a WSJ article.  Almost everyone assumed he was referring to yesterday's article that blew the lid off the trade deal agreement.  With those two updates, suddenly, the deal didn't look like a sure thing and markets were quickly moving risk-off.

But there was one significant, final attempt to get the risk-on move back on track.  It came courtesy of China holding a news conference in which it essentially said "we agree with this deal and we're gonna sign it."  Markets traded as if the deal was--well... a DONE deal at first, but second thoughts quickly crept in.  At issue: nothing will be signed until Jan 2020 at the earliest--so we still only have words and promises.  Not only that, but some of the words have yet to be fleshed out (specifically, many of the conditions the US has placed on China, such as ag purchases for the Phase 1 process). 

Bottom line, yes it was much more of a deal than we've seen so far, and yes, it did fulfill the stock market's Christmas wish of getting the Dec 15th tariffs canceled, but apart from that, it fell short of offering a resounding confirmation of the phase 1 deal.  As such, bonds have unwound the bulk of yesterday's losses because they're smarter than stocks, which, for some reason, ended the day much closer to their better levels from the past 2 days.


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
101-13 : +0-17
Treasuries
10 YR
1.8240 : -0.0750
Pricing as of 12/13/19 5:09PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:46AM  :  Bonds at Best Levels After Trade Deal Underwhelms
10:16AM  :  Bonds Bouncing Back a Bit
10:06AM  :  ALERT ISSUED: Bonds Tanking as Chinese Briefing Confirms Progress
9:23AM  :  Bonds Improve a Bit More After Trump Tweet
8:51AM  :  Retail Sales Defy Whisper Numbers. Bonds Don't Care

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Oliver Orlicki  :  "Float boat is out."
Rik Purpura  :  "Going to lock everything by end of day.. Not going to play the market shift tweet game next week!"
Matthew Graham  :  "trade-driven market volatility explainer en route to marketing newsletter near you. Happy weekend all."

Economic Calendar
Time Event Period Actual Forecast Prior
Friday, Dec 13
8:30 Import prices mm (%)* Nov 0.2 0.2 -0.5
8:30 Retail Sales (%)* Nov 0.2 0.5 0.3
8:30 Export prices mm (%)* Nov 0.2 0.1 -0.1
10:00 Business Inventories (% ) Oct 0.2 0.2 0.0