When the World Health Organization declared coronavirus an international health emergency yesterday, there were two schools of thought.  At first glance, it should have been good for the bond market as the announcement seemed to indicate things were getting worse.  But bonds fairly quickly began moving in a counterintuitive direction.  The only explanation at the time was that the declaration paved the way for the international community to more effectively combat the disease.  The only other explanation was that traders were using that news as cover to get early month-end trading accomplished. 

We closed out the day yesterday without a clear answer, but that changed in the overnight session as bonds gained ground steadily.  By the time the stock market opened, we were already on a roll.  Then the weaker Chicago PMI data hit and only strengthened the case for bond gains.  In a final flourish, another wave of month-end bond buying hit just before the 3pm CME close, taking 10yr yields to 1.503 and MBS to their best levels since 2016.

It was interesting to see just how willing bonds were to react to econ data in an environment that's seemingly so focused on coronavirus headlines.  That's a good reminder about next week, which brings several of the month's biggest economic reports.


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
102-08 : +0-05
Treasuries
10 YR
1.5050 : -0.0500
Pricing as of 1/31/20 6:06PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:50AM  :  Bonds Rally After Chicago PMI Misses Big

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Caroline Roy  :  "I'm not a broker, but i once was. i agree that the reputation assault was overkill"
DIRK POSTUPACK  :  "If you guys have not visited UWM for the LO training class, you might want to do so. Pretty cool. I am looking forward to the LO 2.0 class soon!!"
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Joe Daquino  :  "The UWM commercial is awesome. Looks like they gave back everything that was taken yesterday."
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Economic Calendar
Time Event Period Actual Forecast Prior
Friday, Jan 31
8:30 Core PCE Inflation (y/y) (%)* Dec +1.6 1.6 1.6
9:45 Chicago PMI * Jan 42.9 48.8 48.9
10:00 Consumer Sentiment (ip) Jan 99.8 99.1 99.1