Unswayed by Fed, Bonds Punt For 3rd Straight Day

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We’ll give Friday a pass because it was technically still part of the 2-day correction leading back from the 4-year highs in the 10yr Treasury yield seen last Wednesday, even though Thursday definitely did the heavy lifting.  Each of the days this week are less debatable.  They’ve been duds–no meaningful movement and no major challenges for established floors/ceilings.  

Today was one of our best chances to see that change, but alas!  The day began with good potential for drama as 10yr yields were closing in on the 3% boundary.  A relatively as-expected ADP Employment report and a fairly tame Refunding Announcement from the Treasury helped bonds find their footing and return to yesterday’s sideways range.

There wasn’t too much anticipatory movement ahead of the 2pm Fed Announcement, but yields were near the top of today’s range at 1:59pm.  The announcement itself was every bit as uneventful as expected, save for the fact the Fed threw in a comment about the inflation target being “symmetrical.”  This would seem to suggest that they’re prepared to let it run a bit above their eventual target so as to make up for all the time spent with it running below target (or more logically, to make sure they don’t stop watering the inflation bush so soon that it dies).  

Either way, bonds were mildly pleased with the announcement, but it could just as easily have been due to an absence of any new threats.  Yields fell back to the lows of the day, but notably failed to challenge the 2.95% technical floor.  Fannie 3.5 and 4.0 MBS each added 1/32nd 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

FNMA 3.5

99-03 : -0-01

Treasuries

10 YR

2.9756 : -0.0004

Pricing as of 5/2/18 4:27PMEST

Today’s Reprice Alerts and Updates

2:04PM  :  Bonds Not Doing Much After Fed Announcement

10:24AM  :  Refunding Announcement Helps Bonds Stay Grounded


MBS Live Chat Highlights

Matthew Graham  :  “serious question? Or are you asking for thoughts on how to best ridicule said realtor?”

David Rudnick  :  “My buddy just called and his realtor reached out to tell him rates are going to 7-8% this year…. Thoughts”

Matthew Graham  :  “FED SAYS HOUSEHOLD SPENDING MODERATED FROM LATE LAST YEAR, BUT BUSINESS INVESTMENT WAS GROWING ‘STRONGLY'”

Matthew Graham  :  “FED SAYS EMPLOYMENT GROWTH HAS BEEN STRONG ‘ON AVERAGE,’ ECONOMY GROWING AT A ‘MODERATE RATE'”

Matthew Graham  :  “- FED SAYS INFLATION HAS ‘MOVED CLOSE’ TO ITS ‘SYMMETRIC’ 2 PCT TARGET AND IS EXPECTED TO ‘RUN NEAR’ THAT LEVEL OVER THE MEDIUM TERM”

Matthew Graham  :  “FED LEAVES TARGET INTEREST RATE UNCHANGED AT 1.50-1.75 PCT”

Ted Rood  :  “I remember writing loans around 2000 and getting excited when I could drop folks’9% rates to 7%”




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