That's right... It's a trader's world...
Let's take a look at why we say that and what happened this AM. What did we have? Some very minor overnight stock futures weakness and a bad print on Consumer Confidence that fell just slightly out of the range of expectation? This was followed by a weak morning in bonds as stocks rocketed skyward for a few minutes before their fall coincided with strengthening fixed income benchmarks and ultimately MBS.
But the extent of the choppiness and divergence from recently established ranges was not at all justified by the relatively underwhelming events of preceding hours. Something was a foot... A trading game... 3 hours later it was obvious. Just another day in the sandbox of the trading world where what looks like a sturdy castle to most everyone else is torn down with the sort of nonchalance that can only connote premeditation.
More of the same tomorrow, but with a more important auction (for the mortgage world at least) in the form of 5yrs, and more important data in the Durable Goods report. Dr. Ben takes the stage at 6pm for another PBS town hall, but that of course, is after hours. All told on the day, we ended UP 8 ticks, so if your afternoon rate sheets are worse than AM, you're owed something. This also means that as long as MBS open in a STABLE fashion, they'd theoretically be able to open down a few ticks from current levels and still result in similar rate sheets to those you had this AM.
Bottom line is this: Although Durable goods might create significant movement in the AM, the 5 yr auction is a broader and more important piece of data and has much more potential to move markets. Again, this happens at 1pm, and again we'll let you know what the impact and implications are for the mortgage world. Same bat time, same bat channel.
MBS Market Alerts
