MBS OPEN: Prices Lower, Flirting With Support

By: Matthew Graham

Recap of Yesterday

  • Import/Export Prices and Consumer Sentiment both read unfriendly to bonds..
  • But bonds rallied throught he AM nonetheless.
  • 12 noon, like clockwork, marked the time for all sides of the market to punch out for the weekend
  • From 8am to noon, MBS up 6 ticks, stocks flat. 
  • From Noon to close, MBS down 8 ticks, stocks down 2 pts in s&p.
  • All in all, 8 tick rally on the shortened week,  moving from 101-16 to 100-24

So far this AM

  • Long end the of yield curve not doing so well with 10's down 12 ticks (3.39 yield) and 30 yr down 26 ticks (yield 4.23)
  • As usual, that translates negatively to lower coupon MBS.  4.5 down 9 ticks at the moment, worst levels of the morning. 

THE DAY AHEAD

  • Went out of our way Friday to show disconnect between Friday losses and the rest of the weekly trend.
  • Noted only exception would be if weekend coincides with trend reversal
  • No scheduled Econ data today
  • 3 instances of Fed speak with Duke, Lacker, and Yellen at 835, 1230pm. and 350 pm respectively
  • various support can be seen on daily chart below
  • most important line in terms of guaging impact of continued losses is not on the chart, but be aware of it: previous long term high at 100-13.
  • Trend reversal won't get any afternoon love, but if trend is not reversing, rebounds of varying amounts might materialize as the day progresses.

 

MBS, Tsy, and LIBOR Quotes...