Bonds Battle Back After Old-Fashioned Sell-Off

0
63


The overnight session and early morning hours saw a good, old-fashioned economic-data-driven sell-off in bond markets.  Asian and European data were  both stronger.  That resulted in about half of the day’s total damage for longer-term bonds.  The biggest market mover of the domestic session was the ADP Employment report, which was much stronger than expected (250k vs 190k forecast).

“But wait!” you say, “I thought bond markets weren’t reacting to econ data these days?!?”  

You’re right.  They’re generally not.  But there’s also not much to base trading decisions on at this time of year.  We’re still waiting for full liquidity to return after the winter holiday break.  Moreover, with much of the East Coast on deep freeze, normal market operations are further inhibited (in terms of personnel, not infrastructure).  

The absence of major, underlying conviction was evident in the supportive ceilings seen in 10yr yields.  They stopped right in line with the week’s previous highs near 2.49%.  Then moved all the way back down into the 2.45’s by the close, and Fannie 3.5 MBS managed to get back within an eighth of a point of Yesterday after being a quarter point weaker this morning.


MBS Pricing Snapshot

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

MBS

FNMA 3.5

102-20 : -0-04

Treasuries

10 YR

2.4525 : +0.0075

Pricing as of 1/4/18 4:43PMEST

Today’s Reprice Alerts and Updates

8:33AM  :  ALERT ISSUED: Weaker After ADP Data, But Most Losses Happened Overnight


MBS Live Chat Highlights

Matthew Graham  :  “RTRS – BULLARD: RECORD STOCK PRICES IN PART REFLECT MARKETS’ REVALUATION OF CORPORATE SECTOR BASED ON TAX CHANGES”

Matthew Graham  :  “RTRS – BULLARD SAYS DOES NOT THINK FED WILL HAVE TO REACT AND RAISE RATES FASTER AS RESULT OF TAX STIMULUS”

Matthew Graham  :  “RTRS – BULLARD SAYS FED NEEDS TO DEBATE WISDOM OF PROCEEDING WITH RATE HIKES IF 10-YEAR BOND YIELDS DON’T INCREASE AND YIELD CURVE FLATTENS”

Matthew Graham  :  “RTRS – FED’S BULLARD SAYS MARKET COMMENTATORS “TOO DISMISSIVE” OF RISKS OF YIELD CURVE INVERSION”

Ted Rood  :  “Did you know MBS Live members also qualify for exclusive discounts on mental health counseling?”


Economic Calendar

Time Event Period Actual Forecast Prior
Friday, Jan 05
8:30 Non-farm payrolls (k)* Dec 190 228
8:30 Unemployment rate mm (%)* Dec 4.1 4.1
10:00 ISM N-Mfg PMI * Dec 57.6 57.4



Original Source