Treasuries were modestly weaker today, while MBS outperformed by holding mostly steady.  That keeps the bond market well within its recent range as well as the longer-term consolidation trend (intact since mid-October).  Upward pressure on yields associated with new "supply" (Treasury auctions and corporate bonds), technical resistance, and improved US/China trade tensions is being offset by downward pressure driven by uncertainty over the next major development in the Middle East.

A widely-followed survey of bond trader positions suggests the highest level of neutrality since the beginning of 2019 and some of the metrics are the most neutral since mid-2017.  This is more a reflection of what we already know than some sort of revelation.  A lot is up for grabs at this stage of the economic cycle with 10yr yields under 2%, progress on a trade deal, a Federal Reserve that's said it isn't planning on doing anything with rates for a while, and inbound economic data that must be taken with a grain of salt due to (potentially temporary) trade-related influences.  And that was all in play BEFORE last week's drone strike news.

Tomorrow brings the sometimes important ADP Employment Report and the 10yr Treasury auction.  Bond yields are at risk of stalling out after the unexpectedly strong move last week.  10yr yields around 1.85% mark an important technical zone/ceiling.   


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
101-24 : +0-01
Treasuries
10 YR
1.8230 : +0.0120
Pricing as of 1/7/20 4:20PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:07AM  :  Almost No Reaction To Highest Services PMI Since August

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Timothy Baron  :  "Yep, feels like a good time to lock in the recent gains."
Oliver Orlicki  :  "Ugh, thinking of locking a few"

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Jan 07
10:00 ISM N-Mfg Bus Act * Dec 57.2 52.0 51.6
10:00 ISM N-Mfg PMI * Dec 55.0 54.5 53.9
13:00 3-Yr Note Auction (bl) 38
Wednesday, Jan 08
7:00 MBA Purchase Index w/e 250.1
7:00 Mortgage Refinance Index w/e 1859.0
8:15 ADP National Employment (k)* Dec 160 67
13:00 10-yr Note Auction (bl)* 24