MBS Live Recap: Winning Streak Thwarted, But Not By Much

This morning's Day Ahead pondered the possibility of a 4th straight day of intraday gains for bonds--something that hasn't happened since last September.  These bullish musings apparently angered the bond gods, who are a stern and unforgiving lot.  Literally moments later, bonds turned red and have been red ever since.  On the bright side, 10yr yields have been orbiting 1.56% fairly reliably these past 4 days (in other words, they've been flat despite some intraday volatility).  This is actually another strong showing considering we have another condensed Treasury auction cycle at the beginning of next week. 2021's rising rate intermission continues...

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

  • IHS/Markit PMIs:
    Composite.........62.2 vs 59.7 previously
    Services............63.1 vs 61.9 f'cast, 60.4 previously
    Manufacturing....60.6 vs 60.5 f'cast, 59.1 prev

  • New Home Sales 1.021m vs 886k f'cast, 846k prev
    (highest since 2006)

Market Movement Recap
08:29 AM

Bonds were microscopically weaker in Asia but gained ground steadily in Europe.  Domestic session is starting just slightly stronger, with most of the improvement happening at the 8:20am CME Open.  10yr is almost 1bp lower at 1.535 and MBS 2.5 coupons are up 1 tick (0.03).

10:21 AM

Steady weakness since the 9:30am NYSE open.  Stronger PMI and New Home Sales data may actually be contributing.  10yr yields now up 3bps to 1.572 and 2.5 UMBS down just over an eighth.

02:06 PM

Decent recovery in the 11am hour as bonds found technical support before breaking above 1.585% (now down to 1.56%).  UMBS are down only 2 ticks on the day now (-0.06) at 103-22 (103.69).

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