MBS Live Recap: Rates Move Back Toward Recent Highs.

Bonds started the day only modestly higher after a fairly uneventful overnight session.  Sellers surfaced even before the stronger ISM Services data, but they were out in full force afterward.  Yields peaked less than an hour later and went  mostly sideways for the rest of the day.  MBS outperformed in the afternoon and hit their weakest levels in the last hour of trading (down more than a quarter of a point in UMBS 2.5 coupons).  For the sake of context, MBS have done their fair share of outperforming recently as well.  The reference to underperformance only pertains to the afternoon hours.  Spreads between MBS and Treasury yields were fairly level, day-over-day.

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

  • ISM Non-Manufacturing 61.9 vs 60.0 f'cast, 61.7 prev

Market Movement Recap
08:59 AM

Bonds modestly weaker overnight, but continuing to operate in a narrow range.  10yr yields up 2bps at 1.50% and MBS down 3 ticks (-0.09).  No major data or market movers in play until 10am ET (ISM Non Manufacturing).

10:42 AM

Weaker in response to the stronger ISM data.  MBS down almost a quarter point and 10yr yields up more than 5bps to 1.533.

02:01 PM

Bonds bottomed out shortly after the last update, but haven't made significant progress back in the other direction.  MBS are down a quarter of a point and 10yr yields are still up more than 4bps at 1.522%. 

04:12 PM

Back to fresh lows in MBS with 2.5 coupons down 10 ticks (.31) at 103-00.  10yr yields are right in line with their highs, up 5.5bps at 1.536.  No new news or motivations.  Just range-finding after this morning's big sell-off.

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