MBS Day Ahead: New Stimulus Ideas and Treasury Auctions Push Yields Back Toward Ceiling

Last night, a new stimulus plan was floated to Pelosi by Mnuchin.  In theory, it includes provisions for several democratic sticking points, thus offering the most promise yet of a stop-gap stimulus/gov funding bill–the one it seems that even republicans view as critically important to pass before Christmas.  Combined with skittish buying demand ahead of today’s 10yr Treasury auction, yields moved higher to start the day, and are once again moving close to a showdown with recent ceilings.

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Apart from the 1pm Treasury auction and the constant threat of new developments on the stimulus front, there are no big ticket market movers on tap.  Really though, the short term is ALL about stimulus.  Bonds know it’s coming, but they don’t know if lawmakers will make good on recent comments about the need to get it done before x-mas.  If that happens, it’s bad for Treasuries.  MBS might not take it quite so hard.  They’ll also probably experience some of their own distortions toward the end of the week surrounding the 30yr fixed UMBS settlement process.


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

103-19 : -0-02

Treasuries

10 YR

0.9530 : +0.0400

Pricing as of 12/9/20 10:03AMEST

By Matthew Graham , dated 2020-12-09 10:05:20

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Courtesy of Mortgage News Daily

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