So far, the correction to the coronavirus bond market rally is only a few days old, but it became much more problematic today.  Yesterday was arguably the first day of the correction and at that point, we hadn't seen quite enough weakness to label it as such (merely to offer warnings about the risk of additional negative momentum).  But today's weakness was nearly as big.  Taken together with the small bounce on Monday, this week is starting to look fairly troubling for bonds.

Interestingly enough, this wasn't destined to be the case today.  In fact, by 3am ET, bonds were actually slightly better versus yesterday.  Then came news of a newly approved anti-viral cocktail purported to treat coronavirus in China.  Markets treated headlines as if a cure or successful vaccine had been newly discovered. 

In actuality, "the antidote" is just the combination of two existing antiviral medications that gained regulatory approval to be tested in human trials, but the market is REALLY desperate to justify the bounce that the underlying technicals have been clamoring for, and this fit the bill nicely.  Essentially all of the drama was out of the way by the start of domestic trading, and there wasn't much movement to speak of after that.  That pre-market volatility was covered in detail in my morning commentary.

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
102-01 : +0-00
10 YR
1.6490 : +0.0480
Pricing as of 2/5/20 6:13PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:09AM  :  ISM Non-Manufacturing Adding Modest Pressure
8:20AM  :  ALERT ISSUED: ADP Surge Hits Already-Weak Bonds

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Feb 05
7:00 MBA Purchase Index w/e 283.8 313.7
7:00 Mortgage Refinance Index w/e 2975.7 2581.2
8:15 ADP National Employment (k)* Jan 291 156 202
10:00 ISM N-Mfg PMI * Jan 55.5 55.0 55.0
10:00 ISM N-Mfg Bus Act * Jan 60.9 56.5 57.2
Thursday, Feb 06
7:30 Challenger layoffs (k) Jan 32.843
8:30 Labor Costs Preliminary (%) Q4 1.4 2.5
8:30 Jobless Claims (k) w/e 215 216