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MBS RECAP: Lock/Float Considerations Ahead of Jobs Report
May 6 2021, 3:50PM

Bonds made it through Thursday without any notable volatility, let alone actual drama.  That's been the case for the entire week as Friday's jobs report has been the obvious attraction. Unlike the rest of the week, post-NFP drama is definitely possible tomorrow, for better or worse.  With rates at their lowest levels in 2 months, Treasury yields close enough to the bottom of their recent trading range, and 6 consecutive trading sessions with slightly lower end-of-day 10yr yields, the case for a defensive lock bias is compelling in the same way someone might wish to cash in their chips after a better-than-expected winning streak.  That doesn't mean rates can't improve tomorrow (always best to look at that as a 50/50), just that there's higher risk without a perfectly commensurate increase in reward.

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

  • Jobless Claims 498k vs 540k f'cast, 590k prev

  • Challenger Job Cuts 22.9 vs 30.6, 34.5 prev (79.6 before that!)

Market Movement Recap
08:37 AM

Calm and flat overnight.  Slightly weaker after the 8:30am econ data (strong jobless claims and Challenger job cut reports).  10yr up about 1 bp and MBS down a tick (0.03).  

01:09 PM

Treasuries have traded both sides of 'unchanged,' but MBS have been doing just a bit better.  2.5 UMBS coupons are up 2 ticks (0.06) on the day and an eighth of a point from morning's lows.  2.0 coupons are 1 tick (0.03) off that pace.

03:35 PM

Yields got as low as 1.557 before bouncing about 1bp higher (still slightly positive on the day).  MBS are outperforming with 2.5 coupons up an eighth of a point.  No salient market movers in play.  On-again/off-again stock/bond correlation.  Generally very quiet ahead of tomorrow's NFP.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
UMBS 2.5
104-00 : +0-04
10 YR
1.5660 : -0.0180
Pricing as of 5/6/21 3:50PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
8:37AM  :  Slightly Weaker After Strong Claims Data

Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, May 06
7:30 Challenger layoffs (k) Apr 22.913 30.603
8:30 Labor Costs Preliminary (%) Q1 -0.3 -0.8 6.0
8:30 Productivity Preliminary (%) Q1 5.4 4.3 -4.2
8:30 Jobless Claims (k) w/e 498 540 553
8:30 Continued Claims (ml) w/e 3.690 3.620 3.660
Friday, May 07
8:30 Non-farm payrolls (k)* Apr 978 916
8:30 Unemployment rate mm (%)* Apr 5.8 6.0
10:00 Wholesale inventories mm (%) Mar 1.4 1.4
10:00 Wholesale sales mm (%) Mar 1.0 -0.8
15:00 Consumer credit (bl) Mar 20.00 27.58

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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