The big news at the end of last week was Trump’s decision to veto the defense bill (which, in turn, meant a veto of the broader stimulus/spending bill).  That meant Congress would have the chance to make adjustments or override the veto today, but Trump saved them the trouble last night by signing.  With that confirmation out of the way, bonds had just a bit more selling to do, but trading levels remain in the prevailing ranges.  

The remainder of the week will be similar to last week.  In terms of trading hours, it’s a carbon copy with Thursday being an early close and Friday a market holiday.  There are three differences though:

1. Whereas we could assume we were seeing some early month/year-end trading last week, it’s even more likely to cause a few distortions this week.  This isn’t an incredibly big deal, nor is it likely to be an incredibly big market mover, but it can mean the sudden appearance of positive or negative momentum for no apparent reason.

2. With the stimulus bill completely in the books, markets no longer have to account for an uncertainty on the fiscal side of the equation (at least not until the Georgia senate elections are decided).  That gives some traders a bit more freedom to trade how they want to trade.

3. The slate of economic data is quite a bit lighter and more diffuse.  The most important difference here is the presence of Treasury auctions on the first 2 days of the week.  The baseline assumption here would be that bonds are easier to sell until the auction cycle is over and easier to buy after it concludes at 1pm tomorrow afternoon.


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

103-15 : -0-03

Treasuries

10 YR

0.9530 : +0.0230

Pricing as of 12/28/20 8:47AMEST

Tomorrow’s Economic Calendar

Time Event Period Forecast Prior
Monday, Dec 28
11:30 2-Yr Note Auction (bl) 58
13:00 5-Yr Note Auction (bl)* 59
Tuesday, Dec 29
9:00 CaseShiller 20 yy (% ) Oct 6.9 6.6
10:00 Consumer confidence * Dec 97.0 96.1
13:00 7-Yr Note Auction (bl)* 59
Wednesday, Dec 30
9:45 Chicago PMI * Dec 57.0 58.2
10:00 Pending Sales Index Nov 128.9
10:00 Pending Home Sales (%) Nov 0.0 -1.1
Thursday, Dec 31
8:30 Jobless Claims (k) w/e 830 803
Friday, Jan 01
0:00 New Years Day *

By Matthew Graham , dated 2020-12-28 08:50:04

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Courtesy of Mortgage News Daily

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