Bonds began the day in weaker territory but rallied back to nearly unchanged levels after several comments from inbound Treasury Secretary Janet Yellen.  Of particular note were Yellen’s comments on the possibility of repealing certain tax cuts as well as the need to get the federal budget on a more sustainable path.  Both of those bode well (or “better,” anyway) for Treasury issuance vs demand.  The econ calendar was silent and other market moving headlines were scarce.  Traders are waiting for the next major cue that settles the debate between keeping the broader negative trend intact or riding the recent positive correction back to lower-yield technical boundaries.  

Market Movement Recap

08:28 AM

Bonds were moderately weaker at the start of the overnight session, in line with gains in global equities markets.  Trading has been flat since the start of the European session with 10yr yields 2bps higher at 1.107%.  UMBS are starting the day down 2 ticks (0.06) just a hair under 103-00.

11:39 AM

Bonds rallying a bit on Yellen comments (i.e. parts of tax cuts should be repealed, Federal budget needs to be put on sustainable path).  10yr yields dropped from 1.116 to 1.090 as a result, but are still 1bp higher on the day.  UMBS 2.0 coupons are down 1 tick (.03) on the day, but up 2 ticks from the morning lows.

02:36 PM

Uneventful since the last update.  Yields rose modestly and briefly by way of correcting to the Yellen-inspired rally, but they’re now back in line with the lows of the day.  MBS are dropping off a bit in the afternoon with both 2.0 and 1.5 coupons about 2 ticks (0.06) off their best levels.  Not a significant move by any means.


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

102-32 : -0-01

Treasuries

10 YR

1.0900 : -0.0070

Pricing as of 1/19/21 3:49PMEST

Today’s Reprice Alerts and Updates

8:50AM  :  Slightly Weaker Overnight, Holding Inside Last Week’s Range


MBS Live Chat Highlights

Matt Graham  :  “TREASURY NOMINEE YELLEN SAYS NOTHING IS MORE IMPORTANT TO FUTURE OF HOUSING THAN WHAT WE DO WITH FANNIE MAE AND FREDDIE MAC”


Economic Calendar

Time Event Period Actual Forecast Prior
Wednesday, Jan 20
7:00 MBA Purchase Index w/e 338.9
7:00 MBA Refi Index w/e 4706.3
10:00 NAHB housing market indx Jan 86 86

By Matthew Graham , dated 2021-01-19 15:51:16

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Courtesy of Mortgage News Daily

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