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MBS RECAP: Small, Defensive Shift Heading Into The Weekend
Jun 25 2021, 11:56AM

The highest core inflation in decades proved to be no big deal this morning.  In fact, bonds rallied.  Unfortunately, that set up for a technical selling opportunity as traders pared long positions heading into the weekend.  The selling stalled right at the 1.53% technical level in 10yr yields.  We'll hope that ceiling continues to hold and we'll send out another alert if it doesn't (provided MBS are following suit).  

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

  • Core PCE y/y 3.4 vs 3.4 f'cast, 3.1 prev

  • Consumer Sentiment 85.5 vs 86.5 f'cast, 86.4 prev
    1yr inflation expectations down 0.4% from May
    5yr inflation expectations down 0.2% from May

Market Movement Recap
08:42 AM

Stocks and bonds both popped modestly stronger after as-expected PCE data.  Most of the rally has been retraced in bonds, but 10s are still down 1.4bps at 1.485 and UMBS 2.0s are holding gains of 2 ticks (0.06).

10:23 AM

The low yields seen after PCE made for a good selling opportunity in bonds heading into the weekend.  10s are up half a bp now at 1.505 and 2.0 UMBS are unchanged at 100-24 (100.75).  

11:44 AM

More serious selling heading into the weekend and the 11am hour, but 10yr yields bounced almost perfectly at the 1.53% level. MBS are outperforming nicely for now.  If 1.53% breaks, we could see another flush of weakness.  If it holds, the week is over.

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
103-08 : +0-01
10 YR
1.5260 : +0.0390
Pricing as of 6/25/21 11:56AMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:00AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
10:51AM  :  ALERT ISSUED: Treasuries at Weakest Levels, MBS Outperforming
8:38AM  :  Slightly Stronger After Inflation Data

Economic Calendar
Time Event Period Actual Forecast Prior
Friday, Jun 25
8:30 Outlays (consumer spending) (%) May 0.0 0.4 0.5
8:30 Core PCE Inflation (y/y) (%)* May 3.4 3.4 3.1
10:00 Sentiment: 5y Inflation (%) Jun 2.8 2.8
10:00 Sentiment: 1y Inflation (%) Jun 4.2 4.0
10:00 Consumer Sentiment (ip) Jun 85.5 86.5 86.4

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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