We had to wait all the way until January 24th of 2020, but bonds finally offered their first real shred of willingness to challenge the established range of late 2019.  When we talk about ranges, we use 10yr Treasuries for these reasons.  In 10yr terms, the range has been 1.71 to 1.95%, which is reasonably narrow for a 3 month+ time frame.

It looked like the range would be quickly crushed as war with Iran quickly entered the realm of possibility on the night of the missile attacks against Iraqi air bases.  But with the de-escalation the following day, the range was actually strongly reinforced.  Rates have been trickling since then without more than a 5bp move in 10yr yields until today.  That same move also breaks us well below the 1.71% boundary to close at 1.686%.  

As we often discuss, the first break beyond a technical level requires some confirmation.  That makes Monday important from a technical standpoint.  It also makes the coronavirus news cycle important as it appears to be the key ingredient in this particular range breakout.

Next week also has a ton of econ data as well as Fed announcement and press conference on Wednesday.  A big bounce in Treasuries would be mitigated to some extent by likely outperformance on the part of MBS (they've underperformed this week, despite moving in a friendly direction).


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
101-31 : +0-02
Treasuries
10 YR
1.6860 : -0.0530
Pricing as of 1/24/20 6:05PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:46AM  :  Data, Headlines, and Momentum Adding Up to More Gains

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  ""How Coronavirus is Helping Housing" coming right up. with historical look at SARS timeline and current evolution of rate response against the backdrop of booming home sales data"
Matthew Graham  :  "yes John, you will be able to share a newsletter with all that info in just a few minutes."
John Irmen  :  "If this is primarily driven by the Coronavirus is it possible to see how long the rally lasted that was tied to SARS?"
Michael Colagrossi  :  "lock now go into the weekend with a smile"
Michael Colagrossi  :  "only two other points Sept 19 and sept 16 sept 17 and sept 16 are better"
Michael Colagrossi  :  "we are at almost the best levels since 2016... I am telling clients take the chips off the table"
Nathan Miller  :  "lock, disclose, next"
Timothy Baron  :  "If this latest move continues I'm locking for sure."
Matt Hodges  :  "not everyone has overnight protection"
Rik Purpura  :  "I don't see a negative re-price happening today so why not lock on Sunday?"
John Park  :  "I'm thinking the same"
aaron meyer  :  "I locked 4 loans"
Matt Hodges  :  "Aaron and I both locked today, JP"
John Park  :  "who on here is locking today?"
Victor Burek  :  "we broke 1.71, so i am floating over weekend, check pricing on Monday"
Victor Burek  :  "FRANCE DECLARES FIRST CONFIRMED CASE OF CORONAVIRUS: REUTERS"
Oliver Orlicki  :  "MBS lagging today"
Timothy Baron  :  "That's what I'm sayin', SH. China is making a big deal about it, which is either a great sign or a terrible one. Hopefully it is overblown, as E"L"S said."
Eric "Leo" Sayer  :  "I'm not discounting what you are saying TB, I like Ira, think it may be a bit overblown...hopefully that is right"
Scott Hoppa  :  "TB cancelling the new year celebrations is a big deal. It is the biggest holiday in china, over 320 million people travel for the holiday, That is equivalent to the ENTIRE population of the US traveling for the holiday."
Timothy Baron  :  "Sigh. The point is that it is uncertain how it will play out, so it is reasonable that markets are being affected to some extent."

Economic Calendar
Time Event Period Actual Forecast Prior
Friday, Jan 24
9:45 PMI-Services (Markit) * Jan 53.2 52.9 52.8
9:45 PMI-Composite (source:Markit) * Jan 53.1 52.7
9:45 PMI-Manufacturing (Markit) * Jan 51.7 52.5 52.4
Monday, Jan 27
10:00 New home sales chg mm (%)* Dec 1.5 1.3
10:00 New home sales-units mm (ml)* Dec 0.730 0.719
13:00 5-Yr Note Auction (bl)* 41