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MBS RECAP: Bonds Suddenly Wondering if They've Been Too Gloomy on The Economy
Jun 3 2020, 3:54PM

Bonds haven't been interested in econ data because none of it has had the ability to tell much of a story.  Today's ADP Employment report is arguably an exception as it was staggeringly stronger than expected.  Other data surprised to the upside, stocks set more multi-month highs, and bonds suddenly find themselves on the run. 

Econ Data / Events
  • 11:30-11:50 AM (ET) - Fed 30yr UMBS Buying  

  • ADP Employment: -2.760m vs -9.000m f'cast, -19.557m prev

  • ISM Non-Manufacturing 45.4 vs 44.0 f'cast, 41.8 previously

  • Factory Orders -13.0 vs -14.0 f'cast

Market Movement Recap
08:35 AM

Bonds were modestly weaker overnight and are now under additional pressure after the much stronger-than-expected ADP Employment Report.  10yr yields up nearly 3bps, but MBS outperforming for now, down only 2 ticks (0.06).

10:08 AM

Additional losses after the 10am econ data (stronger ISM and factory orders).  MBS down a quarter point and 10yr yields up and over the important 0.74% technical ceiling.

12:01 PM

Potentially seeing some support now, but only after things got pretty panicky there for a bit.  10yr yields remain over .74 (they were as high as .771).  2.0 UMBS are now down only a quarter point, but had been down nearly half a point at the lows of the morning.  

02:04 PM

Bonds haven't hit any weaker levels compared to the 10-11am hour, but they've been unable to rebound in any convincing way.  2.0 MBS are still more than a quarter point off and 10yr yields are up 7.4bps at .761.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
UMBS 2.0
101-21 : -0-08
10 YR
0.7590 : +0.0790
Pricing as of 6/3/20 3:52PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:07AM  :  ALERT ISSUED: Negative Reprice Risk Increases as Postive Data Continues
9:32AM  :  ALERT ISSUED: Weak Enough For This Alert, But Not as Weak as it Seems
8:26AM  :  Bonds Weaken After Massively Stronger-Than-Expected ADP Data

About the Author

Chief Operating Officer, Mortgage News Daily / MBS Live
A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators. ... more

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