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MBS RECAP: Treasury Consolidation Runs Out of Room, But MBS Keep Gaining
Sep 29 2020, 4:00PM

 MBS continue to outperform due to favorable supply vs demand.  Treasuries continue sideways.  In fact, they found a way to express even more uncertainty than the prevailing sideways range of .63-.73 in 10yr yields.  Today's trading range?  .64-.66.  This caps a consolidation trend that will have a hard time getting any narrower.  Perhaps bonds are circling the wagons ahead of tonight's presidential debate and prepared for a relatively bigger move tomorrow?

Econ Data / Events
  • 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)

  • Case Shiller Home Prices (July) +0.6% vs 0.3 f'cast, 0.0 prev

  • Case Shiller Home Prices (annual) 3.9% vs 3.8 f'cast

  • Consumer Confidence 101.8 vs 89.5 f'cast 86.3 prev

Market Movement Recap
08:53 AM

Modest overnight weakness in stocks and strength in bonds.  Treasuries and MBS lost just a bit of ground at the open and are now perfectly unchanged on the day.  UMBS 2.0 coupons are at 103-11 (103.34) and 10yr yields are at .6577%.  

12:34 PM

MBS made small but noticeable gains during and immediately after the 11:30-11:50am Fed buying operation.  Sellers brough light supply once again.  2.0 coupons are up an eighth on the day.  10yr yields are also near their lows, down 1.14 bps at .646.  Stock market weakness is well-correlated with bond gains so far.

03:45 PM

MBS pushing the best levels of the day  (103.5) despite Treasuries weakening just slightly this afternoon.  Keep crediting the favorable supply/demand environment for MBS outperformance and the stock market for ending the day's Treasury rally.  That said, 10yr yields are still more than half a bp lower.

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
103-16 : +0-05
10 YR
0.6479 : -0.0151
Pricing as of 9/29/20 3:58PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:18AM  :  Huge Beat in Consumer Confidence. No Major Reaction in Bonds

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Sep 29
9:00 CaseShiller 20 yy (% ) Jul +3.9 3.8 3.5
10:00 Consumer confidence * Sep 101.8 89.5 84.8
Wednesday, Sep 30
7:00 MBA Purchase Index w/e 327.0
7:00 Mortgage Refinance Index w/e 3579.8
8:15 ADP National Employment (k)* Sep 650 428
8:30 GDP Final (%) Q2 -31.7 -31.7
9:45 Chicago PMI * Sep 52.0 51.2
10:00 Pending Sales Index Aug 122.1
10:00 Pending Home Sales (%) Aug 3.4 5.9

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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