By the end of the trading day, congress was seemingly no closer to inking a stimulus deal than they were yesterday.  That said, it could still come at any time between now and next Wednesday.  When it does (if it does?) markets will largely have priced it in already, but confirmation will be worth some small additional amount of volatility.  Apart from that, 2020 is basically in the books.  If we see anything that suggests otherwise, it’s just as likely to be temporary distortions created by the year-end trading environment. 

Market Movement Recap

08:41 AM

Bonds weakened in Europe following unexpectedly strong econ data, but erased the losses heading into the domestic session.  Brexit jitters helped, and a sharper rally in UK bonds led the way for a reversal in EU and US markets.  10yr is just under 1bp lower at .926.  UMBS 1.5 is up 2 ticks (.06) at 100-28 (100.875).

12:11 PM

Mid-morning weakness as money flowed out of both sides of the market (year-end profit taking/position squaring).  Both stocks and bonds lost ground starting at 9:30am.  Bonds are still close to unchanged, but now red instead of green.

03:00 PM

Weakness continues across all markets (stocks, Treasuries, MBS…) with UMBS now down an eighth of a point on the day and almost a quarter of a point from the morning’s best levels.  10yr yields are up 1.5 bps at .95%.  There is no specific, overt motivation for the weakness in the news or economic calendar.  This is just year-end trading (rebalancing, repositioning, or moving to cash for balance sheet purposes).


MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

MBS

UMBS 2.0

103-17 : -0-03

Treasuries

10 YR

0.9500 : +0.0200

Pricing as of 12/18/20 4:56PMEST

Today’s Reprice Alerts and Updates

2:26PM  :  ALERT ISSUED: Negative Reprice Risk Increasing

11:10AM  :  ALERT ISSUED: MBS at Lows, But Reprice Risk is Limited For Now

8:41AM  :  Domestic Buyers and Brexit Jitters Erase Overnight Weakness


Economic Calendar

Time Event Period Actual Forecast Prior
Friday, Dec 18
10:00 Leading index chg mm (%) Nov +0.6 0.5 0.7
Tuesday, Dec 22
8:30 GDP Final (%) Q3 33.1 33.1
10:00 Existing home sales (ml)* Nov 6.70 6.85
10:00 Exist. home sales % chg (%)* Nov -1.0 4.3
Wednesday, Dec 23
8:30 Core PCE Inflation (y/y) (%)* Nov 1.5 1.4
8:30 Durable goods (%)* Nov 0.6 1.3
8:30 Core CapEx (%)* Nov 0.6 0.8
9:00 Monthly Home Price yy (%) Oct 9.1
10:00 New Home Sales (ml) Nov 0.990 0.999
10:00 Consumer Sentiment (ip) Dec 81.4 81.4
Thursday, Dec 24
14:00 Christmas Holiday *
Friday, Dec 25
0:00 Christmas Day *

By Matthew Graham , dated 2020-12-18 16:58:18

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Courtesy of Mortgage News Daily

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