The first 2 days of the month (yesterday and the day before) were all about a quick adjustment into weaker territory for the bond market.  Today served as confirmation that the adjustment was complete.  The result?  10yr yields are ready to digest tomorrow’s jobs report from a relatively high perch in the low 0.9’s.  MBS are still in their own world, and nowhere near the weaker levels seen in early November.  Moreover, rates are so high relative to MBS prices that lenders don’t need to make big changes to rate sheets until bond market weakness gets extreme.

Econ Data / Events

  • 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)

  • Jobless Claims 712k vs 775k f’cast, 787k prev

  • ISM Non-Manufacturing PMI 55.9 vs 56.0 f’cast, 56.6 prev

Market Movement Recap

08:13 AM

Reasonably sideways overnight session for Treasuries.  Much like yesterday, we’re seeing selling increase as domestic traders get started for the day.  10yr yields are roughly unchanged ahead of the AM data and MBS are just a hair weaker.

09:40 AM

For the 3rd straight day of the new month, Treasuries are making one of their biggest moves of the day at the 9:30am NYSE Open.  Unlike the past 2 days, today’s version sees yields falling modestly but quickly from just over .93 to just under .92.  They’ve already bounced back up to .925, but it was interesting nonetheless.  MBS added one tick (0.03) and are now unchanged on the day.

01:31 PM

Nice little recovery in bonds (discussed in greater detail in this update).  Yields bottomed in the noon hour at the EU bond close, but haven’t bounced too much higher since then.  Treasuries are leading the way and MBS are underperforming for a change.  2.0 UMBS down 3 ticks (0.09) at 100-27 (100.84).  10yr yields down 1.7bps at .92%.  

04:14 PM

Stocks and yields dropped moderately but abruptly following vaccine related headlines (supply chain and quality control issues causing delays for Pfizer… 50% of initial estimate will ship.  “raw materials didn’t meet standards”).  Yields briefly touched .90% but are back up to .915% now.  MBS are near the highs of the day, but did not have a major response to the headlines.


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

103-22 : +0-01

Treasuries

10 YR

0.9130 : -0.0330

Pricing as of 12/3/20 4:27PMEST

Today’s Reprice Alerts and Updates

3:51PM  :  Yields Briefly Drop to Best Levels After Vaccine Headlines

12:11PM  :  Treasuries Rallying Despite Stronger Stocks

8:47AM  :  Microscopic Weakness After Jobless Claims Beats Forecast


Economic Calendar

Time Event Period Actual Forecast Prior
Thursday, Dec 03
8:30 Continued Claims (ml) w/e 5.520 5.915 6.071
8:30 Jobless Claims (k) w/e 712 775 778
10:00 ISM N-Mfg Bus Act * Nov 58.0 60.9 61.2
10:00 ISM N-Mfg PMI * Nov 55.9 56.0 56.6
Friday, Dec 04
8:30 Non-farm payrolls (k)* Nov 469 638
8:30 Unemployment rate mm (%)* Nov 6.8 6.9
8:30 International trade mm $ (bl) Oct -64.8 -63.9
10:00 Factory orders mm (%) Oct 0.8 1.1

By Matthew Graham , dated 2020-12-03 16:29:10

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Courtesy of Mortgage News Daily

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