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MBS RECAP: Modest Weakness Persists as Markets Rotate Back Toward Risk
Nov 24 2020, 4:44PM

Whether we want to pin the blame on Trump's willingness to begin the transition of power or Yellen being named as Biden's Treasury Secretary yesterday, stocks and bonds have both been doing more to move in a "risk-on" direction over the past 2 days.  Yesterday's move in stocks was clearly a response to Yellen (around 3pm ET).  Today's move was more gradual and it occurred throughout the morning hours during NYSE trading.  All told, it was a bigger deal for stocks, however, as 10yr yields are only 2bps higher at the moment.  The bigger news for the mortgage market today was the release of updated conforming loan limits (read more).

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

  • Case Shiller Home Prices (y/y %)6.6 vs 5.1 f'cast, 5.3 prev

  • FHFA Home Prices (y/y %) 9.1 vs 8.1 prev

  • Consumer Confidence 96.1 vs 98.0 f'cast, 101.4 prev

Market Movement Recap
08:48 AM

Slightly weaker overnight with minimal volatility.  Early weakness attributed to Trump agreeing to start handing over the reins to Biden.  10yr yields started about 1bp higher at .87%. MBS are down 2 ticks (0.06) at 100-28 (100.875) in 1.5 coupons.  Waiting on 9am home price data to give us an idea of conforming loan limits TBA at 1pm ET.

10:05 AM

No reaction to any of the morning's econ data and no acknowledgement of 930am NYSE open for stocks/bonds.  10yr remains just over 1bp higher at .87% and MBS remain 2 ticks (0.06) lower.

12:12 PM

Bond weakness has ramped up in the past few minutes with 10yr yields up to .886% and 1.5 UMBS down 6 ticks (.19) on the day.  Several potential reasons for the weakness include comments from Fed's Williams (downplayed additional easing), pre auction positioning, and broad "risk-on" sentiment.

04:39 PM

Nice bounce for MBS after today's Fed buying operation (more on that in this update).  Treasuries tried to stage a recovery at the same time, but are heading out near their weakest levels of the day.  Stock market strength has coincided fairly reliably with the bond market weakness over the past 2 days.


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
103-18 : -0-01
Treasuries
10 YR
0.8850 : +0.0260
Pricing as of 11/24/20 4:42PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:38PM  :  MBS Back At Highs After Fed Buying Operation
11:57AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
11:28AM  :  ALERT ISSUED: MBS Near Lows; Limited Reprice Risk
8:46AM  :  Slightly Weaker To Start as Mild Technical Bounce Continues

Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Nov 24
9:00 CaseShiller 20 yy (% ) Sep +6.6 5.1 5.2
9:00 Monthly Home Price yy (%) Sep +9.1 8.0
9:00 CaseShiller 20 mm SA (%) Sep +1.3 0.7 0.5
10:00 Consumer confidence * Nov 96.1 98.0 100.9
13:00 7-Yr Note Auction (bl)* 56
Wednesday, Nov 25
7:00 MBA Purchase Index w/e 303.9
7:00 Mortgage Refinance Index w/e 3901.6
8:30 GDP Prelim (%)* Q3 33.2 33.1
8:30 Core CapEx (%)* Oct 0.5 1.0
10:00 Core PCE Inflation (y/y) (%)* Oct 1.4 1.5
10:00 New home sales-units mm (ml)* Oct 0.970 0.959
10:00 Consumer Sentiment (ip) Nov 77.0 77.0
10:00 New home sales chg mm (%)* Oct 1.5 -3.5

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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