If the Fed is doubling down on its inflation goals, it makes sense for bonds to be afraid–at least a little bit.  But with today seeing yields hold the same ceiling as yesterday, are we already in a position to ask “was that it?”  Or are markets just waiting to sell more bonds in the week ahead?

Econ Data / Events

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

  • Core Annual PCE Inflation 1.3 vs 1.2 f’cast, 1.1 prev

  • Chicago PMI 51.2 vs 52.0 f’cast

  • Consumer Sentiment 74.1 vs 72.8 f’cast

Market Movement Recap

08:24 AM

Bonds added to yesterday’s weakness during Asian trading hours, but found their footing and pushed back into positive territory in the European trading session.  No major volatility on either account.  10yr down 1.5bps to .739.  2.0 UMBS beginning up 3 tick.

10:38 AM

Bonds have been improving slowly and steadily throughout domestic trading hours, generally moving in tandem with stock market weakness.  MBS now up 6 ticks (.19) and 10yr yields down 3bps to .721.

01:51 PM

After hitting the strongest levels around 1230pm, bonds are quickly back to the weakest levels.  Granted, the trading range is narrow, but it’s unpleasant all the same.  No overt motivations.  Just Friday afternoon traders trading on a month-end Friday afternoon.

04:31 PM

And we’re back… not quite to the best levels of the day, but well off the lows heading into the close.  Very little correlation with any potential market movers this afternoon, but both stocks and bonds began to improve just after 2pm ET (a time we often associate with random movements with increased participation among day traders and algorithms).


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

103-01 : +0-07

Treasuries

10 YR

0.7244 : -0.0216

Pricing as of 8/28/20 4:43PMEST

Today’s Reprice Alerts and Updates

1:40PM  :  ALERT ISSUED: Bonds Heading Toward Weaker Levels; Reprice Risk Considerations

9:00AM  :  Little-Changed After PCE Inflation Data


Economic Calendar

Time Event Period Actual Forecast Prior
Friday, Aug 28
8:30 Core PCE Inflation (y/y) (%)* Jul 1.3 1.2 0.9
9:45 Chicago PMI * Aug 51.2 52.0 51.9
10:00 Consumer Sentiment (ip) Aug 74.1 72.8 72.8

By Matthew Graham , dated 2020-08-28 16:45:06

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Courtesy of Mortgage News Daily

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