Bonds were slightly cautious ahead of the Fed announcement today, with a few traders possibly wondering if recent economic/pandemic-related traction would bring a shift in tone.  Indeed it did, but Powell was clear in separating a more upbeat tone from any implications for monetary policy.  Bottom line: the Fed’s punchbowl is still firmly bolted to the table.  Bonds rallied back accordingly in the afternoon.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • MBA Refi Apps 3185 vs 3219 prev
    Purchase Apps 281 vs 295 prev

Market Movement Recap

08:47 AM

Bonds opened flat in Asia and weakened slightly in Europe.  German Bund yields spiked moderately to their highest levels since early March and a small amount of that negativity brushed off on Treasuries.  10yr is up 1.1bps to start the domestic session and 2.5 UMBS are down 1 tick (.03) at 103-14 (103.44).

10:46 AM

Bonds under a bit of pressure since the 9:30am NYSE open (early gains reversed then).  Slightly bigger bump after 1030am.  Tempting to chalk it up to oil inventories, but oil prices aren’t moving as much.  10yr yield up 1.5bps at 1.64 and 2.5 UMBS down 1 tick (0.03) on the day now.

01:44 PM

Losing more ground ahead of the Fed.  Slow burn though.  10yr up 2.3bps at 1.65%.  UMBS 2.5 coupons down 3 ticks (0.09) on the day and just over an eighth of a point from the morning’s highs.

02:46 PM

More volatility than expected post-Fed.  Early move was weaker, but bonds are turning green as Powell speaks (and reiterates commitment to accommodation).  


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 2.5

103-16 : +0-01

Treasuries

10 YR

1.6090 : -0.0130

Pricing as of 4/28/21 4:29PMEST

Today’s Reprice Alerts and Updates

2:42PM  :  Powell Sticks to Script. Bonds Like It

2:04PM  :  ALERT ISSUED: Reprice Risk Temporarily Increases After Fed Announcement, But Bonds Are Bouncing

1:57PM  :  ALERT ISSUED: Reprice Risk Increasing Ahead of The Fed

11:07AM  :  ALERT ISSUED: MBS Down an Eighth From AM Highs

8:55AM  :  Pushing Back Against Overnight Weakness


MBS Live Chat Highlights

Matt Graham  :  “MBS are one of the two big holes into which the Fed can dump money to provide accommodation!”

Matt Graham  :  “Thank you, Powell!”

Matt Graham  :  “POWELL: ASKED ABOUT MBS PURCHASES, SAYS THEY ARE CLOSELY RELATED TO TREASURY MARKET”

Matt Graham  :  “POWELL SAYS FED’S MBS PURCHASES ARE NOT MEANT TO PROVIDE DIRECT ASSISTANCE TO HOUSING MARKET”

Matt Graham  :  “FED SAYS INDICATORS OF ECONOMIC ACTIVITY AND EMPLOYMENT HAVE STRENGTHENED AMID PROGRESS ON VACCINATIONS, STRONG POLICY SUPPORT”

Matt Graham  :  “FED POWELL: IT’S NOT TIME YET TO HAVE CONVERSATION ABOUT TAPERING”

Matt Graham  :  “POWELL SAYS WE’RE A LONG WAY FROM FULL EMPLOYMENT”


Economic Calendar

Time Event Period Actual Forecast Prior
Wednesday, Apr 28
7:00 MBA Purchase Index w/e 281.4 295.5
7:00 MBA Refi Index w/e 3185.3 3219.9
10:30 Crude Oil Inventory (ml) w/e 0.090 0.659 0.594
14:00 FOMC rate decision (%)* N/A 0.125 0.125 0.125
14:30 Powell Press Conference *
Thursday, Apr 29
8:30 GDP Advance (%)* Q1 6.1 4.3
8:30 Continued Claims (ml) w/e 3.614 3.674
8:30 Jobless Claims (k) w/e 549 547
10:00 Pending Sales Index Mar 110.3
10:00 Pending Home Sales (%) Mar 5.0 -10.6

By Matthew Graham , dated 2021-04-28 16:29:54

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Courtesy of Mortgage News Daily

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