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Markets May Be Underestimating Tomorrow's Jobs Report
Today's trading session was rather uneventful for bonds except for the fact that it resulted in the 6th straight intraday high in Treasury yields. As discussed in the Day Ahead, this is right about the time that we begin to look for a technical correction simply due to probabilities of such streaks lasting more than 6 days. Unfortunately for probability, this particular streak collides with big jobs report tomorrow. Even though markets have seemed reluctant to react to econ data, the jobs report can always serve as a jumping off point for trading ideas and volatility. Beyond that, the consensus forecast is arguably low based on the other available labor market data.
Econ Data / Events
Fed MBS Buying 10am, 1130am, 1pm
Jobless Claims 779 vs 830 f'cast 812 prev
Labor Costs 6.8 vs 4.0 f'cast, -7.0 prev
Productivity -4.8 vs -2.8 f'cast, 5.1 prev
Factory Orders 1.1 vs 0.7 f'cast, 1.3 prev
Market Movement Recap
08:17 AM MBS are unchanged to start the day (+1 tick or 0.03) while Treasuries are about 1bp higher after mixed trading overnight. No major market movers in play as bonds wait for tomorrow's NFP, fiscal stimulus news, and next week's Treasury auction supply.
09:29 AM 8:20am CME open brought bond weakness and that selling ran its course before the 8:30am econ data. Since then, yields have corrected back toward unchanged levels, but 10yr is still up 1bp. MBS are in slightly stronger territory. Stocks are up about a quarter of a percent and trying to break intraday highs (in futures) at the 9:30am NYSE open.
01:50 PM Quiet morning after the initial correction back toward stronger levels. Now a quiet afternoon with 10yr yield just shy of unchanged and UMBS 2.0 coupons up 2 ticks (0.06) at 103-03 (103.09).
Rob Chrisman
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Making headlines is United Wholesale averaging $15 billion a month in production and earning total net income of $3.4 billion for 2020 , quite a change from the $415 million of net income in 2019. And over time, we change. In your 20s: “I fell ... (read more)
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MBS Commentary
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Markets May Be Underestimating Tomorrow's Jobs Report
Today's trading session was rather uneventful for bonds except for the fact that it resulted in the 6th straight intraday high in Treasury yields. ... (read more)
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Housing News
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The Urban Institute (UI) has looked at a final mortgage rule issued by the Consumer Financial Protection Bureau (CFPB) in late 2020 which would provide a 3-year pathway to safe harbor for loans that are a rebuttable presumption or nonqualified mortga... (read more)
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Mortgage Rate Watch
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Mortgage Rates were steady to slightly lower yesterday even though prevailing trends in the bond market suggested caution. Today's trading is a different story. Granted, there haven't been any huge, dramatic moves, but today's bond market weakness ad... (read more)
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Housing News
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CoreLogic reports that December saw yet another acceleration in home price increases. The company's Home Price Index (HPI) rose 9.2 percent on an annual basis. The increase in November was 8.2 percent. The month-over-month change, 1.1 percent, was al... (read more)
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Housing News
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Public and privately funded construction spending ended 2020 with a 4.7 percent increase over spending in 2019. The U.S. Census Bureau said the combined outlays for the recent year was $1.430 trillion compared to 1.365 trillion the prior year. Reside... (read more)
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