Evergrande is a Chinese real estate company that has been circling the drain for months.  During that time, press reports increasingly suggest that Evergrande's collapse could have some measure of systemic impact given the vast amount of money it owes to other institutions.  Several of the likely-to-default bonds are due this week and so far, there is no word on anything resembling a bailout from the Chinese government.  Some of the most alarming opinions have suggested this is China's "Lehman moment," but there's plenty of pushback against that thesis. 

Still, the turmoil is worth some "risk-off" trading momentum in the overnight session.  S&P futures continued Friday's selling trend, dropping more than 1.5% by 8am. Offshore Chinese equities markets tanked at the fastest pace since July (incidentally, that July sell-off was also linked to Evergrande drama, but it hadn't yet gone viral as a market mover.  Today is different though.  This time around, you're not one of the cool kids unless you're blaming Evergrande for the overnight move. 

20210920 open.png

10yr yields started the day down more than 4bps, and up a quarter of a point.  In both cases, traders have pushed back against the rally as liquidity picks up for the day.  So maybe this is just the sort of bounce we would expect to see in response to last Friday's assessment (that the sell-off was driven by traders moving to the sidelines ahead of the weekend and Wednesday's Fed announcement).  Either way, when we zoom out on the chart, Treasuries are still in a consolidation pattern.

20210920 open2.png


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
101-01 : +0-03
Treasuries
10 YR
1.3310 : -0.0390
Pricing as of 9/20/21 9:53AMEST

Tomorrow's Economic Calendar
Time Event Period Forecast Prior
Monday, Sep 20
10:00 NAHB housing market indx Sep 74 75