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MBS RECAP: Bad Vibes Persist For Bonds and Rates
Feb 3 2021, 4:20PM

Bonds began the day in weaker shape, thus keeping the threat of an ongoing correction alive.  After a fairly sideways morning, MBS dropped more sharply in the afternoon.  Treasuries maintained a gentle, but clear selling trend throughout the day.  Moreover, yields easily broke up and over the 1.125% pivot point without a second though. Taken together, this is bad news for rates as it easily reinforces the negative short term trend we've been following. In turn, that negative short-term trend is part of a broader negative trend in the bigger picture. 

Econ Data / Events
  • Fed MBS Buying 10am, 1130am, 1pm

  • ADP Employment 174 vs 49 f'cast, -78 prev

  • ISM Services PMI 58.7 vs 56.8, highest in 2 yrs
    ISM Employment Index highest since Feb 2020

Market Movement Recap
08:33 AM

Strong corporate earnings and steady-to-stronger econ data in Europe conspired to push bond yields higher overnight.  This morning's ADP data is adding fuel to the fire.  10yr yields are pushing the 1.125% technical level (1.127% currently).  MBS are down about an eighth of a point.

10:26 AM

Weaker following ISM data (10yr hit highs of day at 1.1323), but they've been bouncing back since 10:20am as stocks slide.  Stimulus gridlock could be a factor.

01:57 PM

Choppy trading throughout the morning hours with a slight bias toward weaker levels.  MBS down an eighth and closer to the day's weakest levels.  10yr is up 3bps at 1.125%.  Stocks are up half a percent and near their highs of the day.

03:36 PM

Bonds have trickled back to the weakest levels of the day, but at a measured pace.  No major sources of inspiration here, but MBS seemed to struggle more after the Fed's final buying operation of the day (which ended at 1:20pm)

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
103-01 : -0-07
10 YR
1.1370 : +0.0300
Pricing as of 2/3/21 4:18PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
4:17PM  :  ALERT ISSUED: Negative Reprices Are Now Becoming Possible
3:36PM  :  ALERT ISSUED: MBS Back At The Lows, But Volatility is Minimal
10:25AM  :  Bonds Catching a Break as Stocks Slide
10:10AM  :  ALERT ISSUED: More Weakness After ISM Data
8:21AM  :  ALERT ISSUED: Weaker Overnight; ADP Data Not Helping

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Feb 03
7:00 MBA Purchase Index w/e 334.6 334.2
7:00 MBA Refi Index w/e 4746.2 4261.5
8:15 ADP National Employment (k)* Jan 174 49 -123
10:00 ISM N-Mfg PMI * Jan 58.7 56.8 57.2
10:00 ISM N-Mfg Bus Act * Jan 59.9 57.3 59.4

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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