With modest overnight weakness and a small negative reaction to this morning’s headlines (ADP and Treasury issuance), bonds may be encountering some more resistance on their journey toward lower yields and higher prices.  Is this a meaningful signal or just incidental consolidation? 

Econ Data / Events

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

  • ADP Employment 167k vs 1.500m f’cast, 4.314m prev

  • ISM Services 58.1 vs 55.0 f’cast, 57.1 prev

Market Movement Recap

08:37 AM

10yr yields aren’t panicking, but they’re up roughly 3.5bps on the day at .546 after a strong ADP revision and big increase to Treasury issuance.  As expected, MBS are outperforming amid general bond market weakness with 2.0 coupons down only 3 ticks (0.09) at 103-20 (103.625).

10:26 AM

Modest weakness after super strong ISM data (not necessarily because of it).  MBS and Treasuries at weakest levels but not panicking.  10yr = .5477%,  UMBS 2.0 down 0.09 on the day (3 ticks).

04:01 PM

General malaise (or insignificant consolidation of the previous rally?) continues as MBS hit their lows (down almost a quarter point).  10yr yields are sideways near their higher levels of the day.


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

103-16 : -0-07

Treasuries

10 YR

0.5494 : +0.0364

Pricing as of 8/5/20 4:04PMEST

Today’s Reprice Alerts and Updates

4:00PM  :  ALERT ISSUED: Negative Reprices Becoming a Stronger Possibility

2:54PM  :  ALERT ISSUED: Negative Reprice Risk Considerations

10:25AM  :  ALERT ISSUED: Bonds at Weakest Levels After PMI Data

8:36AM  :  Interesting Reaction to ADP; Treasury Issuance Update Adding Pressure


Economic Calendar

Time Event Period Actual Forecast Prior
Wednesday, Aug 05
7:00 MBA Purchase Index w/e 300.7 306.1
7:00 Mortgage Refinance Index w/e 3688.1 3955.9
8:15 ADP National Employment (k)* Jul 167 1500 2369
10:00 ISM N-Mfg Bus Act * Jul 67.2 60.0 66.0
10:00 ISM N-Mfg PMI * Jul 58.1 55.0 57.1
Thursday, Aug 06
8:30 Jobless Claims (k) w/e 1415 1434

By Matthew Graham , dated 2020-08-05 16:07:10

Source link

Courtesy of Mortgage News Daily

Leave a Reply