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MBS RECAP: Sell-Off Talked Tough But Backed Down When Confronted
Aug 4 2021, 4:02PM

On a week that started with a downbeat ISM Manufacturing report and a day that began with a weak ADP employment report, this morning's ISM Non-Manufacturing numbers were surprising enough to get bond sellers fired up.  But the ongoing economic reality (the one where covid case counts are rising at their fastest pace since the start of the pandemic and where the Fed is waiting at least a month or two longer before dialing back its bond purchases) told the sell-off to take a seat.  After a tense little stand-off, that's exactly what happened.

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

  • ADP Employment 330k vs 695k f'cast, 680k prev

  • ISM Non Manufacturing 64.1 vs 60.5 f'cast

Market Movement Recap
10:20 AM

Stronger overnight with additional gains after ADP Employment.  But a big reversal after stronger ISM data.  MBS now down an eighth and 10yr yields up 2bps to 1.194

10:54 AM

Weakness snowballed a bit before leveling off with 10yr yields up 4bps at 1.214.  These are the highs of the day, so we can't rule out another move higher.  2.0 UMBS are down a quarter point on the day and 3/8ths from the morning's highs.

12:01 PM

Nice bounce underway.  10yr back to 1.177--basically unchanged.  UMBS 2.0 down only an eighth on the day now (vs a quarter point last time).

03:13 PM

The recovery has established itself well enough at this point with 10s less than 1bp higher on the day still.  MBS have picked up a bit more ground, now down only 2 ticks (0.06) 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
102-02 : -0-02
10 YR
1.1740 : +0.0000
Pricing as of 8/4/21 4:02PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:11PM  :  Calmer Now, But Still Slightly Weaker On The Day
10:22AM  :  ALERT ISSUED: Negative Reprice Risk Increasing
10:04AM  :  ALERT ISSUED: Bonds Lose Ground After ISM Data
8:35AM  :  Stronger Start Thanks to Weaker ADP

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Aug 04
7:00 MBA Purchase Index w/e 247.5 251.7
7:00 MBA Refi Index w/e 3571.3 3570.4
8:15 ADP National Employment (k)* Jul 330 695 692
10:00 ISM N-Mfg PMI * Jul 64.1 60.5 60.1
10:00 ISM N-Mfg Bus Act * Jul 67.0 60.6 60.4
10:30 Crude Oil Inventory (ml) w/e 3.626 -3.102 -4.089

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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