The week began with bond markets reacting to weaker economic data with a logical rally.  That’s the sort of quintessential connection that’s been fairly elusive for most of the post-pandemic era. Last month’s super strong jobs report (and subsequent bond losses) suggested that trend may be changing.  Today’s initial confirmation adds to expectations for more of the same as the week continues.

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • ISM Manufacturing 60.7 vs 65.0 f’cast, 64.7 prev
    Employment index 55.1 vs 65.1 f’cast, 59.6 prev

  • Construction Spending 0.2 vs 1.9 f’cast

Market Movement Recap

08:34 AM

A drop in covid cases and decent data in Europe pushed yields higher overnight.  Treasuries followed somewhat, but have bounced back a bit in the first few minutes.  10yr yields still up 1bp at 1.635 and 2.5 UMBS down 2 ticks (.06) at 103-23 (103.78).

11:33 AM

sharp gains after 10am econ data (more here) are reversing now.  10yr yields back up to 1.615 (-1bp on the day), and UMBS 2.5 coupons are back to unchanged after being more than an eighth of a point higher.

03:31 PM

previous weakness fizzed just before the noon hour and bonds opted to drift sideways in modestly stronger territory.  10yr yields just under 2bps lower and 2.5 UMBS 2 ticks (0.06) higher at 103-26 (103.81).


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

103-24 : -0-01

Treasuries

10 YR

1.6010 : -0.0300

Pricing as of 5/3/21 4:01PMEST

Today’s Reprice Alerts and Updates

11:56AM  :  ALERT ISSUED: MBS More Than an Eighth Off The Highs

10:07AM  :  Additional Gains After Weaker ISM Data

9:00AM  :  Bonds move back into positive territory


MBS Live Chat Highlights

Matt Graham  :  “WILLIAMS SAYS THE DATA AND CONDITIONS WE ARE SEEING NOW ARE NOT NEARLY ENOUGH FOR THE FOMC TO SHIFT ITS MONETARY POLICY STANCE”


Economic Calendar

Time Event Period Actual Forecast Prior
Monday, May 03
10:00 ISM Manufacturing PMI * Apr 60.7 65.0 64.7
10:00 ISM Mfg Prices Paid Apr 89.6 86.1 85.6
10:00 Construction spending (%) Mar 0.2 1.9 -0.8

By Matthew Graham , dated 2021-05-03 16:01:53

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Courtesy of Mortgage News Daily

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