Here are the most notable changes:

  1. The vague notion of symmetric 2 percent inflation has been replaced with a specific goal of “moderately above 2 percent so that it averages 2 percent over time.”
  2. They now refer to bond buying as fostering “accommodative financial conditions, thereby supporting the flow of credit to households an businesses”
  3. The Fed added that they’re “prepared to adjust the stance of monetary policy as appropriate if risks emerge.” 

That’s about it!  Heading into the announcement, the list above served as a baseline for almost any prediction–a bare minimum taken “as read” before discussing additional/bigger changes.  

The remainder of their potential impact would have to be gleaned from the updated economic projections which will be discussed in the video in greater detail.

Econ Data / Events

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

  • Retail Sales 0.6 vs 1.0 f’cast, 0.9 prev

  • Core Retail Sales -0.1 vs +0.5 f’cast, +1.4 prev

  • NAHB Confidence 83 vs 78 f’cast, 78 prev

Market Movement Recap

10:56 AM

10yr yields hit the lows of the day at 8:45am following a positive response to weaker Retail Sales data.  Bonds have weakened modestly since then, ultimately hitting the highs of the day at 10:25am.  Both Treasuries and MBS are still in positive territory on the day.  

02:08 PM

After 3-4 minutes of indecision bonds dipped into negative territory following the Fed announcement.  It’s not a runaway sell-off though.  In fact, we’re holding closer to unchanged-to-stronger.  If we’re going to see a bigger move, traders may be waiting for Powell at 2:30.  That said, there wasn’t much “meat” in this announcement. 

04:37 PM

Remarkably small reaction to what might have been remembered as a landmark Fed announcement.  After the initial volatility shook out, we’re left with less than a 2bp rise in 10yr yields (and still very much inside the range).  MBS are down 1 tick (0.03) on the day.


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

102-31 : -0-01

Treasuries

10 YR

0.6953 : +0.0163

Pricing as of 9/16/20 4:41PMEST

Today’s Reprice Alerts and Updates

2:49PM  :  ALERT ISSUED: Bonds Losing Ground More Quickly After Powell Downplays Asset Purchases

2:07PM  :  Bonds Losing Some Ground After Fed Announcement

12:27PM  :  ALERT ISSUED: Reprice Risk Considerations Ahead of The Fed

11:10AM  :  MBS Back in Negative Territory

8:43AM  :  Bonds Slightly Stronger After Weak Retail Sales Data


MBS Live Chat Highlights

Matt Graham  :  “RTRS – FED SAYS WILL MAINTAIN TREASURY AND AGENCY BACKED SECURITIES PURCHASES AT LEAST AT CURRENT PACE TO HELP FOSTER ACCOMMODATIVE FINANCIAL CONDITIONS”


Economic Calendar

Time Event Period Actual Forecast Prior
Wednesday, Sep 16
7:00 MBA Purchase Index w/e 316.2 317.7
7:00 Mortgage Refinance Index w/e 3289.4 3415.1
8:30 Retail Sales (%)* Aug 0.6 1.0 1.2
10:00 NAHB housing market indx Sep 83 78 78
10:00 Business Inventories (% ) Jul 0.1 0.1 -1.1
14:00 FOMC rate decision (%)* N/A 0 – 0.25 0.125 0.125
14:32 Powell Press Conference *
Thursday, Sep 17
8:30 Building permits: number (ml) Aug 1.520 1.483
8:30 Build permits: change mm (%) Aug 17.9
8:30 Housing starts number mm (ml) Aug 1.478 1.496
8:30 Philly Fed Business Index * Sep 15.0 17.2
8:30 House starts mm: change (%) Aug 22.6
8:30 Jobless Claims (k) w/e 850 884

By Matthew Graham , dated 2020-09-16 16:43:44

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Courtesy of Mortgage News Daily

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