With Trump signing the covid relief and government funding bill last week, the bond market had seemingly moved past its downside risks as they related to stimulus.  But just when you thought we were out of the woods, there’s more stimulus to consider!  In fact, the House has already passed a bill raising direct payments to $2000, and it’s not entirely clear if the bill can get the requisite 2/3rds support in the senate or if McConnell will even put it to a vote.

There is a laundry list of political chess moves relating to the override of the veto on the National Defense Authorization Act to consider, as well as the implications for the Georgia senate races (probably the single most important consideration for financial markets right now), but if the $2000 version does pass the Senate, it would likely put additional upward pressure on rates.

All other things being equal, bonds would remain perfectly content to live out their 2020 days in the “same old range” with 10yr yields between .90 and .96, give or take.

McConnell is expected to say something about the $2000 bill today.  If he avoids sending it to a vote, things will get interesting as Sanders is expected to filibuster the override of the defense spending bill.  While he couldn’t ultimately prevent the override (nor would he want to), merely by delaying it, he would be ‘inconveniencing’ the GOP, including the campaign efforts of the incumbent GA senators (both GOP).  

MBS Pricing Snapshot

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.


UMBS 2.0

103-20 : +0-01


10 YR

0.9450 : +0.0120

Pricing as of 12/29/20 9:37AMEST

Tomorrow’s Economic Calendar

Time Event Period Forecast Prior
Tuesday, Dec 29
9:00 CaseShiller 20 yy (% ) Oct 6.9 6.6
9:00 CaseShiller 20 mm SA (%) Oct 1.0 1.3
10:00 Consumer confidence * Dec 97.0 96.1
13:00 7-Yr Note Auction (bl)* 59

By Matthew Graham , dated 2020-12-29 09:39:27

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Courtesy of Mortgage News Daily

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