The ability of the bond market to defy the cues seen elsewhere in the financial market has been relatively impressive over the past few weeks.  It could even be a bit puzzling, at times.  Specifically, global financial markets freaked out about coronavirus.  Stocks and bond yields fell abruptly.  Coronavirus case count growth then stopped accelerating and financial markets began to move in the other direction.  This was especially true for the US stock market, and I would go so far as to say "mostly true" for Chinese equities markets.  But bonds generally continued calling those bluffs.  As a new week begins, those bets look a little less reckless, and any additional gains would make them look downright prescient.

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Bonds are leading the charge because, unlike stocks (which can follow flights of fancy and present day performance), bonds are tasked with adjusting for future economic changes.  Even though coronavirus and COVID-19 won't spell the end of the human race, bonds know they'll have a measurable economic impact.  Much of the resilience we're witnessing is the simple accounting for that impact.  At the start of the current week, it means 10yr yields are challenging the most recent consolidation range, potentially sending a signal that rates will be willing to spend more time near multi-year lows than previously thought.

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Economic data is moderately important this week although there aren't too many big-ticket market movers.  Thursday's Philly Fed Index is the only report with a fairly consistent track record of causing a reaction in bonds lately.  Friday's Markit PMIs can also fill that role if they fall far enough from consensus.  Apart from that coronavirus headlines remain relevant, as do any additional updates from central banks or government officials about the monetary or fiscal policy responses. 

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
102-02 : +0-01
10 YR
1.5610 : -0.0270
Pricing as of 2/18/20 9:11AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Tuesday, Feb 18
8:30 NY Fed Manufacturing Feb 5.00 4.80
10:00 NAHB housing market indx Feb 75 75
Wednesday, Feb 19
7:00 MBA Purchase Index w/e 267.4
7:00 Mortgage Refinance Index w/e 3123.6
8:30 House starts mm: change (%) Jan 16.9
8:30 Core Producer Prices YY (%)* Jan 1.3 1.1
8:30 Housing starts number mm (ml) Jan 1.425 1.608
8:30 Build permits: change mm (%) Jan -3.7
8:30 Building permits: number (ml) Jan 1.450 1.420
Thursday, Feb 20
8:30 Philly Fed Business Index * Feb 12.0 17.0
10:00 Leading index chg mm (%) Jan 0.4 -0.3
Friday, Feb 21
9:45 PMI-Manufacturing (Markit) * Feb 51.5 51.9
9:45 PMI-Composite (source:Markit) * Feb 53.3
9:45 PMI-Services (Markit) * Feb 53.0 53.4
10:00 Existing home sales (ml)* Jan 5.43 5.54
10:00 Exist. home sales % chg (%)* Jan -1.8 3.6