MBS UPDATE: Stock Market Open Contributes To Moderation.
Considering that the opening commentary rather casually discussed a 10 tick drop in prices, it occurs to us that this might cause a certain level of concern for some of you. So although the market is behaving much as we'd expect in the presence of what we see as relatively uninspiring data--choppy, range-bound, supply-driven flows, giving the impression of being data driven only as an excuse to kick off movement and reverting to the recent norms shortly thereafter--we thought you'd appreciate the following update.
Don't get me wrong, we're not completely non-chalant about the S&P breaking it's AM low. It's just that this trader's world is a harsh reality sometimes. The morning starts. Data comes out. And without looking at the reaction in MBS, I'd have probably guessed that the data was uninspiring and after a nominal amount of lip-service for the econ data, it would be right back to the range. But no matter how many times this scenario plays out, when the prices put on their display of ostensibly purposeful movement, it's hard to call their bluff on occassion.
So bottom line, the update at the moment is exactly the same as it would have been if absolutely no data or news had come across today: Choppy and directional... In line with previous ranges...