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MBS RECAP: Bonds on The Defensive as Range Breakout Looks More Serious
Oct 5 2020, 3:37PM

Last week saw yields break higher after being squeezed by a consolidation pattern inside a wider sideways range.  That type of breakout implied a test of the prevailing range ceiling (.72).  After a head-fake and recovery last Thursday, the new week begins with yields definitively breaking the .72 ceiling.  There are several places to lay blame, but at this point the weaker momentum is its own justification for existence.

Econ Data / Events
Market Movement Recap
08:32 AM

8:20 CME open saw sellers lined up to sell to start the week.  Some cite preparations for the week's Treasury supply.  Others point to stronger stocks and/or Trump's covid progress.  10yr up 2.32bps at .727 and 2.0 UMBS down 2 ticks (0.06) at 103-13 (103.41).

10:54 AM

Things have deteriorated fairly quickly with selling pressure constant since 8:20am.  10yr yields now up almost 5bps to .75% and 2.0 UMBS down 6 ticks (.19) to 103-09 (103.28).  

01:29 PM

Yields are making a case for a new ceiling at .762% and have been trading under that level for more than an hour now.  Cooperation from a sideways stock market isn't hurting.  MBS have clawed back half of their losses on the day, now down an eighth of a point after being down as much as a quarter.

03:23 PM

10yr yields at new highs for the day now, up 6bps at .765.  MBS have given up most of the gains they'd recovered heading into the afternoon.  The move lines up with a push to the highest stock prices of the day with S&P futures up 1.73% versus 5pm Friday.

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
103-07 : -0-08
10 YR
0.7717 : +0.0777
Pricing as of 10/5/20 3:34PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:33PM  :  ALERT ISSUED: The Actual Final Alert For The Day
2:05PM  :  Friendly Bounce; MBS Erase More Than Half of Their Losses
11:09AM  :  ALERT ISSUED: Negative Reprices Now More Likely
10:24AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
9:53AM  :  ALERT ISSUED: For Those About to Lock....

Economic Calendar
Time Event Period Actual Forecast Prior
Monday, Oct 05
10:00 ISM N-Mfg PMI * Sep 57.8 56.3 56.9
10:00 ISM N-Mfg Bus Act * Sep 63.0 61.0 62.4

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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