Bonds were weaker earlier in the trading session but rallied back mid-morning before coasting mostly sideways into the close.  Bond bulls were frustrated by the inability to break the floor at 1.27-1.28% in 10yr yields.  Bond bears were frustrated by the clear unwillingness to explore new highs compared to yesterday.  In other words, it was an “inside day” with lower highs and higher lows, and part of a 2-day consolidation following the highest yields in 11+ months.  Such consolidations can be preludes to big bounces OR renewed selling pressure.  There weren’t any major clues in today’s session about which side is going to win.  

Econ Data / Events

  • Fed MBS Buying 10am, 1130am, 1pm

  • Jobless Claims 861 vs 765 f’cast, 848k prev

  • Import Prices 1.4 vs 1.0 f’cast, 1.0 prev

  • Export Prices 2.5 vs 0.7 f’cast 1.3 prev

  • Housing Starts 1.58m vs 1.658m f’cast, 1.68m prev

  • Building Permits 1.881m vs 1.687m f’cast, 1.704 prev

Market Movement Recap

08:41 AM

Treasuries started stronger in Asia as trading picked back up after Lunar New Year holiday closures.  Yields have been rising modestly since then and stocks have been sliding.  8:30am econ data passed without fanfare leaving 10yr yields 1.5bps higher at 1.297 and UMBS 2.0 coupons nearly an eighth lower.

10:57 AM

Bouncing back in the other direction now after AM weakness took yields to highs by 10:15am.  MBS had been down nearly a quarter of a point, but have bounced back by an eighth (down only an eighth now).  

02:54 PM

Friendly bounce continued, more so for MBS than Treasuries, but both are near unchanged levels currently.  Stocks recovered a bit as well, so we can continue to watch the “accommodation” trade (i.e. stocks and bond yields moving in opposite directions as the market reacts to changes in Fed policy potential.  This is far from the only game in town, but it could be a factor).

04:31 PM

Slight weakness heading into the after hours close, but not enough to make a case for any new momentum.  The takeaway remains equivocal with a clear rejection of the stronger levels, but no threatening move back to the weaker levels.  


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

101-30 : -0-03

Treasuries

10 YR

1.2970 : -0.0020

Pricing as of 2/18/21 4:41PMEST

Today’s Reprice Alerts and Updates

11:00AM  :  Reprice Risk Fading as Bonds Bounce

10:19AM  :  ALERT ISSUED: Negative Reprice Risk Increasing For Some Lenders

8:40AM  :  Little-Changed at Slightly Weaker Levels After Data


Economic Calendar

Time Event Period Actual Forecast Prior
Thursday, Feb 18
8:30 Export prices mm (%) Jan 2.5 0.7 1.1
8:30 Import prices mm (%) Jan 1.4 1.0 0.9
8:30 Building permits: number (ml) Jan 1.881 1.678 1.704
8:30 Housing starts number mm (ml) Jan 1.580 1.658 1.669
8:30 Philly Fed Business Index * Feb 23.1 20.0 26.5
8:30 Build permits: change mm (%) Jan 10.4 4.2
8:30 House starts mm: change (%) Jan -6.0 5.8
8:30 Jobless Claims (k) w/e 861 765 793
Friday, Feb 19
9:45 PMI-Composite (source:Markit) * Feb 58.7
10:00 Exist. home sales % chg (%)* Jan -1.5 0.7
10:00 Existing home sales (ml)* Jan 6.61 6.76

By Matthew Graham , dated 2021-02-18 16:43:14

Source link

Courtesy of Mortgage News Daily

Leave a Reply