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
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).
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.
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.
103-24 : -0-01
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”