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MBS RECAP: Bonds Recover as Friendly Powell Trumps Inflation Data (sort of...)
Jul 14 2021, 4:24PM

Producer prices surged in this morning's report at the same time that Powell's prepared remarks were released for this afternoon's congressional testimony.  The subsequent improvement in bonds makes it tempting to credit Powell's speech for the victory.  Powell certainly did no harm as he maintained the same stance seen in all recent communications but it's important to note that more than half the gains were intact by 8:30am.  In retrospect, yesterday is looking more and more like "supply indigestion" for bonds, and today could thus be seen as a return to the prevailing baseline (apart from yesterday afternoon, 10yr yields have traded a very narrow range between 1.33 and 1.37 for 4 straight days).

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

  • Core PPI 5.6 vs 5.1 f'cast, 4.8 prev

Market Movement Recap
08:39 AM

Somewhat stronger to start the overnight session, flat during Asian hours, 2-way volatility erring toward strength in Europe, and now early domestic trading bringing bonds to stronger levels.  10yr down 4.4bps at 1.373.  UMBS 2.0 up 6 ticks (.19).  No reaction to PPI, but Powell comments aren't hurting.

12:48 PM

No real drama so far.  Moderate gains into 10am and leveling off slightly since then.  UMBS 2.0 still up more than a quarter point and 10yr yields down nearly 5bps to 1.37%.  

04:09 PM

Powell's testimony has been over for more than an hour now and bonds are still in the same gradual rally trend that started in the overnight session.  Looks like yesterday was just a hiccup in the market's ability to digest Treasury auction supply and today has marked a return to prevailing levels (currently 1.35% in 10yr yields and +3/8ths of a point in MBS on the day)

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
101-12 : +0-12
10 YR
1.3490 : -0.0660
Pricing as of 7/14/21 4:24PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
8:39AM  :  No Reaction to Hot PPI; Powell Not Hurting

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Jul 14
7:00 MBA Purchase Index w/e 273.3 252.4
7:00 MBA Refi Index w/e 3361.5 2791.3
8:30 Producer Prices (%) Jun 1.0 0.6 0.8
8:30 Core Producer Prices YY (%)* Jun 5.6 5.1 4.8
8:30 Core Producer Prices MM (%)* Jun 1.0 0.5 0.7

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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