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MBS RECAP: Powell Confirms Taper Timeline, But Bonds Barely Budge
Sep 22 2021, 4:31PM

Bonds reacted well to the initial Fed announcement and economic projections, but reversed course during Fed Chair Powell's press conference.  Powell pulled no punches in confirming the likelihood of tapering in November unless the next jobs report were to come in significantly weaker than expected.  While bonds definitely reacted to those comments, the scope of the move was remarkably contained in the bigger picture.

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

  • Existing Home Sales 5.88m vs 5.89m f'cast, 6.00m prev

Market Movement Recap
08:41 AM

Slightly weaker overnight as broader market had a risk-on bounce following some news on Evergrande.  Yields were only about 1bp higher, but domestic investors pounced at 8:20am CME open, and we're back in positive territory--barely.

12:28 PM

Modest additional gains in the AM hours, but still range-bound overall.  10yr yield down 1.4bps at 1.314 and MBS up 2 ticks now (0.06).

01:48 PM

No major change from the previous update as we enter the 10 minute countdown to the Fed.

02:14 PM

So far so good after the Fed with yields now 3bps lower at 1.297 and MBS up an eighth of a point on the day (good reaction, but not a huge reaction).

03:12 PM

Quick, moderate selling pressure during Powell press conference as tapering timeline is clarified.  MBS are down 3 ticks (0.09) on the day but Treasuries have clawed back into positive territory after briefly turning negative (down .7bps at 1.321). 


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
100-32 : -0-01
Treasuries
10 YR
1.3040 : -0.0200
Pricing as of 9/22/21 4:31PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
4:01PM  :  MBS Back in Positive Territory
2:48PM  :  ALERT ISSUED: Negative Reprice Risk Now Increasing For Some Lenders
2:44PM  :  ALERT ISSUED: Losing Some Ground Now as Powell Clarifies Taper Timing
2:07PM  :  Bonds Digesting Fed Announcement Very Well So Far
9:08AM  :  Back in The Green After Overnight Weakness

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matt Graham  :  "The fact that that comment didn't tank bonds, HARD, is a testament to the extent to which tapering is priced in."
Jason Brookes  :  "Cause we going to end up greeeeeeeeen!"
Matt Graham  :  "FED'S POWELL: FED CAN CERTAINLY SPEED UP OR SLOW DOWN TAPER IF IT BECOMES APPROPRIATE"
Matt Graham  :  "I've never seen such a needle-threading"
Matt Hodges  :  "best result i think we could have gotten"
Sung Kim  :  "basically flat on the day the fed announced taper - good stuff"

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Sep 22
7:00 MBA Purchase Index w/e 283.9 277.9
7:00 MBA Refi Index w/e 3391.1 3185.6
10:00 Existing home sales (ml)* Aug 5.88 5.89 5.99
10:00 Exist. home sales % chg (%)* Aug -2.0 2.0
14:00 FOMC rate decision (%)* N/A 0 - 0.25 0.125 0.125
14:30 Powell Press Conference 9/22/21 *

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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