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MBS RECAP: Decent Showing For Bonds Despite Strong Data
Apr 5 2021, 3:57PM

The rising rate trend of 2021 is increasingly being called into question--even if only temporarily--due to the inability of 10yr yields to quickly break above 1.75%.  That said, at levels of 1.72-1.74% so far this morning, it's definitely not time to celebrate just yet.  Much of the global market is out on holiday.  As such, we have yet to see the full reaction to Friday's strong jobs report.  The remainder of the week is fairly light in terms of calendar data, thus providing a glimpse of less adulterated trading motivations.  Such weeks can end up being boring and sideways, but if we see a strong move down and away from 1.75% (or up and through--not the preferred option, but an option nonetheless) it would offer a strong comment on the state of the rising rate trend.

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

  • ISM Services PMI 63.7 vs 59.0 f'cast, 55.3 prev
    Prices Paid 74.0 vs 71.8, highest since 2008

Market Movement Recap
08:23 AM

Fairly flat overnight with Asian markets leaving 10yr yields almost perfectly unchanged.  After a few hours without any trading (EU markets closed), early domestic trading has been slightly weaker.  Yields up 2.4bps to 1.74% and 2.5 UMBS opening 3 ticks (0.09) lower.

11:07 AM

Steady gains for MBS this morning as Treasuries move mostly sideways.  This outperformance in MBS could be viewed as simply as correcting the underperformance seen late last week.  No major reaction to stronger ISM data.  2.5 coupons up an eighth.  10yr yields up 1.5bps at 1.73%.

02:46 PM

Gains stalled just before the noon hour with MBS briefly up almost a quarter point.  10yr yields bottomed out at 1.700.  Both have pulled back slightly since then.  10yr is unchanged at 1.713 and 2.5 UMBS are up 6 ticks (.19).


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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