We’re Definitely Still Waiting For That New Year Momentum


I had my doubts at times, after some of this week’s volatility.  I thought perhaps that bonds were showing signs that the “new year momentum” (a noticeable bias toward higher or lower rates that tends to emerge in January as traders are free to make new, long-term, strategic bets after having their hands relatively tied at the end of December) was headed in a negative direction.

But now with the week drawing to a close without any major swings, my baseline call for “waiting until at least the 2nd week of January” looks safe (barring the unforeseen in the rest of today’s trading.  In fact, this week has been rather narrow in the bigger picture (each day is represented by one of the 4 rightmost candlesticks in the chart below).  The chart shows what a more serious attempt at momentum looks like in terms of Bollinger Bands and Stochastics. 

Most other technical overlays would tell a similar story: the past few weeks don’t look as extreme as the Summertime moves.  Incidentally, the Summertime moves don’t look extreme either, when compared to moves like those seen after the 2016 presidential election or during the 2013 taper tantrum.

Today’s only significant data is NFP (already out at 148k vs 190k forecast) and the 10am ISM Non-Manufacturing Index (57.6 forecast).  Markets reacted briefly to the NFP number, but quickly settled back into unchanged territory.

MBS Pricing Snapshot

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


FNMA 3.5

102-20 : +0-01


10 YR

2.4563 : +0.0033

Pricing as of 1/5/18 9:36AMEST

Tomorrow’s Economic Calendar

Time Event Period Forecast Prior
Friday, Jan 05
8:30 Private Payrolls (k)* Dec 185 221
8:30 Non-farm payrolls (k)* Dec 190 228
10:00 ISM N-Mfg PMI * Dec 57.6 57.4
10:00 Factory orders mm (%) Nov 1.1 -0.1

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