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MBS RECAP: Staggering MBS Outperformance Easing Negative Momentum Pain
Oct 22 2020, 3:53PM

Bonds are in the throws of an extended negative momentum move that's been in place throughout October.  At times, stimulus-related headlines have accounted for volatility during this move.  Today was one of the handful of weaker days for Treasuries, yet MBS are down only 1 tick heading into the end of the day.  They've been doing this a lot lately, and it makes it even easier for lenders to avoid raising rates nearly as quickly as the broader bond market suggests.

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

  • Jobless Claims 787k vs 860k f'cast, 842k prev

  • Existing Home Sales 6.54m vs 6.3m f'cast, 5.98m prev

Market Movement Recap
08:30 AM

Bonds opened slightly stronger in Asia and remained almost perfectly flat throughout the overnight session.  There was a brief moment of selling pressure just now following the stronger-than-expected Jobless Claims data.  But 10yr yields are staying in their overnight range, down 1.5bps at .806%.  MBS are up 1 tick (+0.03).

09:36 AM

Losing ground now, somewhat abruptly relative to the overnight calm.  Weakness follows headlines quoting Pelosi saying stimulus could be passed before election and that talks with Trump are on a good path.  Treasuries turned negative and are 2bps higher vs 830am.  MBS are also in the red, down 2 ticks (0.06) at 102-30 (102.94).

02:06 PM

MBS have bounced back nicely, ONCE AGAIN outperforming Treasuries which are still near their weaker levels of the day.  Stimulus headlines at 10:45am (read more) were the culprit.  10yr is up just over 2bps.  MBS are down only 1 tick (0.03).


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
102-30 : -0-02
Treasuries
10 YR
0.8596 : +0.0436
Pricing as of 10/22/20 3:51PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:09AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
8:41AM  :  Modest Overnight Gains Intact After Stronger Claims Data

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, Oct 22
8:30 Continued jobless claims (ml) w/e 8.373 9.500 10.018
8:30 Jobless Claims (k) w/e 787 860 898
10:00 Existing home sales (ml)* Sep 6.54 6.30 6.00
10:00 Exist. home sales % chg (%)* Sep +9.4 5.0 2.4
10:00 Leading index chg mm (%) Sep 0.7 0.7 1.2
Friday, Oct 23
9:45 PMI-Composite (source:Markit) * Oct 54.3
9:45 PMI-Manufacturing (Markit) * Oct 53.4 53.2
9:45 PMI-Services (Markit) * Oct 54.6 54.6

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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