Bonds began the day in weaker shape, thus keeping the threat of an ongoing correction alive. After a fairly sideways morning, MBS dropped more sharply in the afternoon. Treasuries maintained a gentle, but clear selling trend throughout the day. Moreover, yields easily broke up and over the 1.125% pivot point without a second though. Taken together, this is bad news for rates as it easily reinforces the negative short term trend we’ve been following. In turn, that negative short-term trend is part of a broader negative trend in the bigger picture.
Econ Data / Events
Fed MBS Buying 10am, 1130am, 1pm
ADP Employment 174 vs 49 f’cast, -78 prev
ISM Services PMI 58.7 vs 56.8, highest in 2 yrs
ISM Employment Index highest since Feb 2020
Market Movement Recap
Strong corporate earnings and steady-to-stronger econ data in Europe conspired to push bond yields higher overnight. This morning’s ADP data is adding fuel to the fire. 10yr yields are pushing the 1.125% technical level (1.127% currently). MBS are down about an eighth of a point.
Weaker following ISM data (10yr hit highs of day at 1.1323), but they’ve been bouncing back since 10:20am as stocks slide. Stimulus gridlock could be a factor.
Choppy trading throughout the morning hours with a slight bias toward weaker levels. MBS down an eighth and closer to the day’s weakest levels. 10yr is up 3bps at 1.125%. Stocks are up half a percent and near their highs of the day.
Bonds have trickled back to the weakest levels of the day, but at a measured pace. No major sources of inspiration here, but MBS seemed to struggle more after the Fed’s final buying operation of the day (which ended at 1:20pm)
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
103-01 : -0-07
1.1370 : +0.0300
|Pricing as of 2/3/21 4:18PMEST|
Today’s Reprice Alerts and Updates
4:17PM : ALERT ISSUED: Negative Reprices Are Now Becoming Possible
3:36PM : ALERT ISSUED: MBS Back At The Lows, But Volatility is Minimal
10:25AM : Bonds Catching a Break as Stocks Slide
10:10AM : ALERT ISSUED: More Weakness After ISM Data
8:21AM : ALERT ISSUED: Weaker Overnight; ADP Data Not Helping