With Fed day behind us, the much-anticipated stimulus/spending bill is all that stands in the way of the bond market tuning out for the rest of the year–something it loves to do on years where there hasn’t been much volatility in the 4th quarter.  This morning’s economic data did it’s best to push yields lower, but traders moved quickly to defend the prevailing range.  MBS outperformed, but neither side of the market was far from where it started by the end of the day.

Econ Data / Events

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

  • Jobless Claims 885k vs 800k f’cast, 862k prev

  • Philly Fed 11.1 vs 20.0 f’cast, 26.3 prev

  • Housing Starts 1.547m vs 1.530m f’cast, 1.528m prev

Market Movement Recap

08:21 AM

Bonds were almost perfectly flat in the overnight session and very close to unchanged.  This won’t continue to be the case if lawmakers in the US can deliver a stimulus/spending bill or if lawmakers in the EU can finalize a Brexit trade deal, but either way, mortgage rates should be fairly well-insulated from broader bond market volatility.

08:41 AM

Noticeably strong reaction to noticeably weak econ data (big jump in jobless claims and big drop in Philly Fed).  Treasuries and MBS both turned green on the data after being slightly weaker to start the day.

11:25 AM

Moderately brisk weakness after a handful of stimulus headlines.  Combined with modest weakness in the past 2 hours, it brings MBS down more than an eighth from the highs (1.5 coupons now unchanged on the day).  10yr yields are back up to .916 after hitting lows of .891.


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

103-18 : +0-01

Treasuries

10 YR

0.9330 : +0.0130

Pricing as of 12/17/20 4:01PMEST

Today’s Reprice Alerts and Updates

12:16PM  :  ALERT ISSUED: Negative Reprices Becoming More Likely

11:23AM  :  ALERT ISSUED: Negative Reprice Risk Increasing For Some Lenders

8:39AM  :  Slight Positive Reaction to Weaker Econ Data


Economic Calendar

Time Event Period Actual Forecast Prior
Thursday, Dec 17
8:30 House starts mm: change (%) Nov 1.2 4.9
8:30 Philly Fed Business Index * Dec 11.1 20.0 26.3
8:30 Housing starts number mm (ml) Nov 1.547 1.530 1.530
8:30 Build permits: change mm (%) Nov 6.2 -0.1
8:30 Building permits: number (ml) Nov 1.639 1.550 1.544
8:30 Jobless Claims (k) w/e 885 800 853

By Matthew Graham , dated 2020-12-17 16:03:44

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Courtesy of Mortgage News Daily

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