Philly Fed and LEI out now:

  • LEI (leading economic indicators were expected down a paltry .2%, however, the actual reading came in at -.7%.  Take that markets!
  • But the empire strikes back with a stronger than expected Philly Fed Survey consensus was for a -15.0 reading, but the actual number read at -12.0.  Although this is still negative, not only had traders priced more risk into the market, but the consensus was already an improvement from the average numbers earlier this year.  So this is an upward pressure item for rates

But I expect the LEI numbers will, at the very least, balance out the Philly Fed.  So far not a lot of drastic reaction in the MBS market.  We are holding steady at 100-16.  OVER the 50 day moving average = good.   UNDER the +2 standard deviation line on our Bollinger Bands (bad). Treasuries reacted worse and so we have tightened (good).  But to eke out gains today would make it the 6th day in a row (bad, because 6 days in a row is very uncommon)


in other words with such a high gain yesterday, and so many days of gains recently, there is inevitably some profit taking combined with the sentiment that we overbought yesterday.

Also, never forget that Banks that hold MBS cannot hold any coupons at a premium on their books, so as the current coupon crests PAR levels, banks will have to sell if those prices continue to hold over PAR.  this creates a  lot of selling pressure on 6.0's.  

At any rate, we more or less expected a slightly down day today, with continuing strength next week.  Let's stay tuned and see how it plays out!  This is better than synchronized diving for sure!  Hey!  we're already back to our Bolinger Band level of 100-19 just in the time I've been typing this.  Oooooh.  Don't get too excited!  (Hmmm. if this rebound takes more shape, I might be willing to say this is even more fun than watching 110M high hurdles!  But only slightly).