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MBS RECAP: Bond Market Breakout is Here (The Bad One)
Aug 11 2020, 4:23PM

For days--and especially since last Friday--we've been increasingly worried that the 2-month bond rally was running out of steam and at risk of a reversal.  The jury was technically out until all of our overhead ceilings were taken out.  As of today, they are.  

Econ Data / Events
Market Movement Recap
08:23 AM

Bonds much weaker overnight as yields finally break technical support at the .57/58 barrier.  Quickly up to .62+.  MBS starting out an eighth lower.  Russian vaccine in the headlines, but it's a supporting actor at best.

10:42 AM

Treasury yields at new highs (.646%) and MBS near the lows of the day, down 6 ticks (0.19) at 103-15 (103.47).  Stocks are roughly were they were before last night's vaccine headlines (mildly stronger).

02:47 PM

Cue the capitulation selling spree for MBS.  They were willing to outperform until this afternoon, but are now getting caught up with Treasury weakness.  2.0 UMBS down almost half a point.  10yr yields up more than 7bps to .656%.  Reprices galore.

04:05 PM

Big volatility in both directions this afternoon, but stock weakness ultimately helping bonds claw back some of the day's losses.  MBS now down "only" 9 ticks (.28) on the day and 10yr yields are back down to .628%.  Good luck assigning blame.  The huddle video goes into greater detail on that.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
UMBS 2.0
103-10 : -0-11
Treasuries
10 YR
0.6432 : +0.0692
Pricing as of 8/11/20 4:21PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:47PM  :  ALERT ISSUED: If You Haven't Seen a Reprice Yet, You Probably Will
1:21PM  :  ALERT ISSUED: Negative Reprices Becoming More Likely
12:20PM  :  ALERT ISSUED: Negative Reprice Risk Increasing For Some Lenders
8:33AM  :  ALERT ISSUED: Sharply Weaker at The Open

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "It's not about good news vs bad news. Treasuries have been overbought. We were due a correction. This is the correction. No need to overcomplicate it. If we want to point to news factoids as back breaking pieces of straw on our camel, fine, but just know that such pieces of straw are almost always available to act as scapegoats for market movement that experts can't otherwise explain. MOST financial analysis of market movement is a hindsight endeavor."
Steve Schneider  :  "thanks all - guess we just wait for a little bit. Been on here for 8 of my 9 years in the industry. This site is invaluable and I was able to get all eligible locks in before the RP. Thanks MG for MBSLive!"

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Aug 11
8:30 Core Producer Prices YY (%)* Jul 0.3 0.0 0.1
Wednesday, Aug 12
7:00 MBA Purchase Index w/e 300.7
7:00 Mortgage Refinance Index w/e 3688.1
8:30 Core CPI (Annual) (%)* Jul 1.1 1.2
13:00 10-yr Note Auction (bl)* 38

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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