Bonds are making a case for a bigger picture bounce with 10yr yields turning a corner just before hitting the epic psychological barrier of 1.0%.  More than a few traders and analysts have been vocal about a break of 1.0% being highly likely by the end of 2020, but the past 8 trading days are causing second thoughts.  Vaccine-related news is center stage for this debate.  It looked as if it would push yields over 1% last week, but it looks completely different this week.  As of this morning, bonds barely registered a reaction to some of the best vaccine news to date.

The following chart shows all three of the recent reactions to vaccine news.  Today's is the smallest, and that's fairly logical considering it was only an update to Pfizer's initial announcement at the beginning of last week.  Nonetheless, the trend of smaller and smaller impact is obvious (especially considering Moderna's news was arguably better than Pfizer's).

20201118 open2.png

Today's Pfizer reaction is hard to see on the chart above, and not much easier to see even after we zoom in:

20201118 open3.png

As the day continues, bonds will consider whether they're willing or able to challenge the next technical level after arguably breaking below 0.88% (in terms of 10yr yields).  There isn't an incredibly clearly defined pivot point in the immediate vicinity, but if we go hunting for one, .836 looks good enough for today.  It now has the added benefit of acting as a very clear point of resistance for today's trading (see the lowest point for the yellow line in the chart above).

20201118 open4.png

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
103-17 : -0-02
10 YR
0.8650 : -0.0070
Pricing as of 11/18/20 10:31AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Wednesday, Nov 18
7:00 MBA Purchase Index w/e 293.5
7:00 Mortgage Refinance Index w/e 3973.1
8:30 House starts mm: change (%) Oct 1.9
8:30 Housing starts number mm (ml) Oct 1.460 1.415
8:30 Building permits: number (ml) Oct 1.560 1.545
8:30 Build permits: change mm (%) Oct 4.7