Bonds improved today–mostly during the overnight trading session, but they did a good job defending those gains during domestic hours.  Friendly Fed comments and weaker economic data were only modestly helpful.  On the other side of the battle, heavy corporate bond issuance, negative technical momentum and yesterday’s vaccine news should at least be keeping the bears in the fight.  If those factors aren’t enough to keep the threat of 1.0%+ 10yr yields on the table this week, it’s hard to imagine what would be.

Econ Data / Events

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

  • Retail Sales 0.3 vs 0.5 f’cast, 1.6 prev (revised down from 1.9)

  • Core Retail Sales 0.1 vs 0.5 f’cast

  • Last month’s Retail Sales revised lower by 0.3 (and “core” by 0.5) 

  • Industrial Production 1.1 vs 1.0 f’cast, -0.4 prev

  • Builder Confidence 90 vs 85 f’cast, 85 prev

Market Movement Recap

08:46 AM

Bonds rallied during European market hours with 10yr yields roughly 3bps lower at .885 to start the domestic session.  Weaker Retail Sales data helped bonds gain a bit more ground and caused overnight stock weakness to extend a bit.  UMBS 1.5 and 2.0 coupons are both an eighth a point lower with a small fraction of those gains arriving after the data.

12:57 PM

Much like yesterday, bonds are sticking to narrow ranges without much fuss.  Apart from the morning’s Retail Sales reaction, econ data hasn’t played a big role.  Notably, bonds are holding gains despite a recovery in stocks.  10yr yields are down 3.3bps at .878 and MBS are up just over an eighth of a point.

03:40 PM

Both Treasuries and MBS are near their best levels of the day as trading winds down.  The gains come in spite of heavy corporate bond issuance and a mid-day bounce in stocks.  We can point toward technicals, economic data, and downbeat comments from Fed speakers (comments that spoke to the possibility of additional accommodation in December).


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

103-17 : +0-07

Treasuries

10 YR

0.8700 : -0.0360

Pricing as of 11/17/20 4:02PMEST

Today’s Reprice Alerts and Updates

8:42AM  :  Stronger Overnight and Adding to Gains After Retail Sales


MBS Live Chat Highlights

Matt Graham  :  “POWELL: WILL START TO THINK ABOUT NORMALIZATION ISSUES ONLY AFTER A “WHOLE LOT” MORE PROGRESS ON EMPLOYMENT, INFLATION GOALS”


Economic Calendar

Time Event Period Actual Forecast Prior
Tuesday, Nov 17
8:30 Import prices mm (%) Oct -0.1 0.2 0.3
8:30 Export prices mm (%) Oct 0.2 0.3 0.6
8:30 Retail Sales (%)* Oct 0.3 0.5 1.9
9:15 Industrial Production (%) Oct 1.1 1.0 -0.6
10:00 NAHB housing market indx Nov 90 85 85
10:00 Business Inventories (% ) Sep +0.7 0.6 0.3
Wednesday, Nov 18
7:00 MBA Purchase Index w/e 293.5
7:00 Mortgage Refinance Index w/e 3973.1
8:30 House starts mm: change (%) Oct 1.9
8:30 Housing starts number mm (ml) Oct 1.460 1.415
8:30 Building permits: number (ml) Oct 1.560 1.545
8:30 Build permits: change mm (%) Oct 4.7

By Matthew Graham , dated 2020-11-17 16:04:34

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Courtesy of Mortgage News Daily

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