Bonds did well at face value today, but there are so many “yeah buts.”  First off, stocks were hugely lower and that definitely helped bonds.  We’re also closing out our 5th straight day of Treasury gains.  6 days and beyond are uncommon.  We’re also heading into a 3-day weekend at a time of great economic and market uncertainty.  We also ultimately ended the day above the .63% pivot point in Treasuries.  Finally, the adverse market fee is looming on the horizon and is already back for many 60 day locks.  So while rates aren’t necessarily destined to be higher next week, they will encounter more headwinds than help if they attempt to move lower.

Econ Data / Events

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

  • Jobless Claims 881k vs 950k f’cast, 1011k prev

  • Jobless Claims methodology change accounts for the drop 

  • Trade Deficit ($, blns) -63.6 vs -58.0 f’cast, -53.5 prev

  • ISM Services PMI 56.9 vs 57.0, 58.1 prev

  • ISM Services Biz Activity 62.4 vs 65.0, 67.2 prev

Market Movement Recap

08:14 AM

Like many recent nights, bonds were weaker out of the gate in Asia and bounced back in Europe.  Treasuries and MBS are close enough to unchanged to call them unchanged vs yesterday’s close.

10:45 AM

Algo buying programs boosted bonds after yields broke below yesterday’s lows.  Modest rally before and after ISM data.  Weaker stocks helping.  10yr down 2bps at .6282.  UMBS up 3 ticks (0.09) at 103-13 (103.41).

03:03 PM

Big (relative) dip in prices heading into the 2pm hour and an equally big bounce since then.  It was a fairly MBS-specific move, and in the bigger picture, not big enough to scrutinize.  2.0 MBS are up 2 ticks (0.06) now and 10yr yields are down 2.76bps at .62%.


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

103-08 : -0-03

Treasuries

10 YR

0.6380 : -0.0130

Pricing as of 9/3/20 4:56PMEST

Today’s Reprice Alerts and Updates

4:26PM  :  ALERT ISSUED: Reprice Risk Food For Thought as MBS Sink Back to Lows

3:03PM  :  Reprice Risk: And Then There Was None

2:15PM  :  ALERT ISSUED: MBS Down Enough For Reprice Risk, But…

11:49AM  :  (Relatively) Sharp Rally and Pull Back Thanks to Stocks

10:45AM  :  Bonds at Best Levels After ISM Data (But Not Because of It)

8:47AM  :  Limited Reaction to Econ Data


Economic Calendar

Time Event Period Actual Forecast Prior
Thursday, Sep 03
8:30 Jobless Claims (k) w/e 881 950 1006
10:00 ISM N-Mfg PMI * Aug 56.9 57.0 58.1
10:00 ISM N-Mfg Bus Act * Aug 62.4 65.0 67.2
Friday, Sep 04
8:30 Non-farm payrolls (k)* Aug 1400 1763
8:30 Unemployment rate mm (%)* Aug 9.8 10.2

By Matthew Graham , dated 2020-09-03 16:58:15

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Courtesy of Mortgage News Daily

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