MBS Live Recap: Treasury Slide Transcends NFP; MBS Outperform

Bond yields rose overnight--well before NFP came out--following the senate's passage of a budget resolution that clears the way for (eventual) passage of the $1.9 trillion stimulus package.  NFP helped (then hurt, then helped again), but bonds ultimately gave in to rising rate pressures as traders began to build in a concession for next week's Treasury auction cycle.  10yr yields were up roughly 3bps on the day at the close, but MBS managed to hold roughly unchanged (further adding emphasis to the Treasury auction trepidation and budget related concerns as a bond market mover). 

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

  • Nonfarm Payrolls..... 49k vs 50k f'cast, -227k prev 
    Unemployment %.... 6.3 vs 6.7 f'cast, 6.7 prev
    Avg work week........ 35 hrs vs 34.7 prev/f'cast. New record

Market Movement Recap
08:20 AM

Bounds vault higher overnight as senate approves $1.9 trillion dollar budget plan.  10yr up almost 4 bps at 1.172% ahead of NFP.  2.0 UMBS down almost an eighth.

08:52 AM

Quick, moderately big gains following big miss in NFP.  MBS turned green and Treasuries came close, but 10yr yields just moved back up, +2.82bps at 1.164%.  MBS are back to 'unchanged.'

10:42 AM

Choppy 2-way trading in heavy volume... now declining and resolving with a technical bounce at the lowest yields of the day (10yr couldn't break below 1.135 y'day afternoon or this morning).  Weakening a bit since then.  UMBS 2.0 hit a similar resistance level at 103-03 (103.09), but are still roughly unchanged on the day.

02:40 PM

Volatile morning gave way to quieter afternoon.  Treasuries sideways to slightly weaker.  MBS outperforming--holding sideways as opposed to showing the moderate weakness seen in Treasuries.  Stocks slept in and haven't done much other than grind sideways at another all-time high.

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