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MBS RECAP: Timid Treasuries Plus MBS Outperformance Suggest Caution
Oct 14 2020, 4:35PM

Last week was clearly a defensive shift for the bond market.  Yields asymptotically approached 0.79% but managed to find support at that technical ceiling.  As the new week gets underway, it looks like Traders may have just been waiting to buy at that supportive ceiling until after the 3-day weekend.  Both Treasuries and MBS were noticeably stronger to start, but there's more ground to (re)cover if we want to get back in the previous range (sub 0.72% 10yr yield).  Moreover, MBS didn't have as good of a day as Treasuries, partly due to the supply situation (discussed in video and the alert) and partly as payback for previous outperformance.

Econ Data / Events
Market Movement Recap
08:38 AM

Treasuries opened flat in Asia and improved in lock-step with European bonds during European hours. European bonds rallied on a strong German Bund auction and general safe haven buying as the continent's covid numbers are flaring up again.  US 10yr yields are inching back into their recent .62-.72 range, currently at .7156%.  UMBS are up 2 ticks (0.06) at 103-04 (103.125).

11:48 AM

Bonds improving and stocks falling on stimulus headlines (Mnuchin saying it's hard to get something done before the election).  10yr at lows of day, down almost 2bps at .712.  2.0 UMBS up almost 3 ticks (0.09) now at 103-05 (103.16).  

03:08 PM

Bond gains have continued, or rather, MBS gains have continued.  Treasuries have actually lost ground in the PM trading hours.  This is a bit of a reversal from yesterday when Treasuries gained while MBS lost ground.  Like yesterday, however, the divergent performance began right after the Fed's scheduled MBS purchases in UMBS 30yr.

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 : +0-05
10 YR
0.7239 : -0.0031
Pricing as of 10/14/20 4:34PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:25PM  :  MBS Outperforming Ever Since Fed Buying Operation
8:54AM  :  Bonds Maintaining Overnight Gains Despite Strong Wholesale Inflation

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Oct 14
7:00 MBA Purchase Index w/e 311.1 316.0
7:00 Mortgage Refinance Index w/e 3612.3 3622.3
8:30 Core Producer Prices YY (%)* Sep 1.2 0.9 0.6
Thursday, Oct 15
8:30 Import prices mm (%) Sep 0.3 0.9
8:30 Philly Fed Business Index * Oct 14.0 15.0
8:30 NY Fed Manufacturing Oct 15.00 17.00
8:30 Jobless Claims (k) w/e 825 840

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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