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MBS RECAP: Big Bond Rally Just Got Bigger
Jul 19 2021, 3:37PM

U.S. traders fired up the screens this morning to see a substantial bond rally and stock sell-off that happened almost exclusively during European hours.  Rather than push back against the move, the domestic session took things a step farther.  The motivations can be viewed as a complex mix of a pain trade for "risk-on" trading positions, technical levels, summertime seasonals, and the simple notion that it's too soon for the Fed to decide on tapering, but at the core is the fact that covid case counts are rising at their fastest pace since January.  The pace of the stock sell-off added an additional source of motivation for bonds.

Econ Data / Events
Market Movement Recap
08:32 AM

Sharply stronger overnight with most of the gains happening in the European session.  General "risk-off" trade.  S&P futures down 1.2%.  10yr yields down 7.6bps at 1.222%, lowest since early Feb.  2.0 UMBS up nearly 3/8ths of a point.

11:35 AM

Gains extended after the 9:30am NYSE open, ultimately flushing 10yr yields 12bps lower to 1.176%.  We've bounced since then, now back up to 1.21%.  UMBS 2.0 coupons are about an eighth of a point off their highs, but still 14 ticks (.44) higher on the day

03:02 PM

Previous weakness was successfully fought off in the noon hour and bonds have been mostly stronger since then.  10yr down 12.3bps at 1.177 and 2.0 UMBS up more than half a point.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
UMBS 2.0
101-30 : +0-16
Treasuries
10 YR
1.1820 : -0.1170
Pricing as of 7/19/21 3:37PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:07PM  :  Back to Best Levels
12:04PM  :  ALERT ISSUED: Reprice Risk Depends on Timing
10:23AM  :  Snowball Rally, Engage!

Economic Calendar
Time Event Period Actual Forecast Prior
Monday, Jul 19
10:00 NAHB housing market indx Jul 80 82 81
Tuesday, Jul 20
8:30 Build permits: change mm (%) Jun -2.9
8:30 Housing starts number mm (ml) Jun 1.590 1.572
8:30 Building permits: number (ml) Jun 1.700 1.683
8:30 House starts mm: change (%) Jun 3.6

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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