MBS OPEN: Support Holding in Rates Market
830AM DATA
- INITIAL JOBLESS CLAIMS FELL TO 521,000 VS. CONSENSUS 540,000 VS. 554,000 PRIOR WK (REVISED FROM 551,000)
- INITIAL JOBLESS CLAIMS 4-WK AVG FELL TO 539,750 VS. 548,750 PRIOR (REVISED FROM 548,000)
- CONTINUED CLAIMS FELL TO 6.04 MILLION VS. CONSENSUS 6.10 VS. 6.112 MILLION PRIOR (REVISED FROM 6.090)
- INSURED UNEMPLOYMENT RATE FELL TO 4.5 PCT FROM 4.6 PCT IN PRIOR WK (REVISED FROM 4.6)
- NEW JOBLESS CLAIMS LOWEST SINCE EARLY JAN
- CONTINUED CLAIMS LOWEST SINCE END OF MARCH
NOTICE A TREND?
Reaction in Markets...
The 10yr TSY yield initially spiked higher...however selling slowed as yields bounced at 3.21%.
Why is 3.21% important?
The majority of buying volume accumulated near 3.21% yesterday! There is a level of support at this yield level.
Below is a December 10yr TSY futures contract. These prices are in basis points. 119.375 = 119-12 = 3.21 in cash market 10yr TSY yield. See the volume accumulation near this morning's 3.21% bounce?Look between 119.35 and 119.50 :-D
Rate sheet influential MBS coupons are benefiting from the bounce that occurred in benchmarks. The FN 4.0 is currently +0-05 at 99-28 yielding 4.0196%. The FN 4.5 is currently +0-02 at 101-31 yielding 4.2598%. The secondary market current coupon is 4.044%. Current coupon yield spreads are slightly tighter vs. benchmarks.
Here is a two day FN 4.5 chart. Prices were initially lower, however the bounce in benchmarks helped MBS prices reverse course...
The Yield Curve is FLATTER!!!
2s/5s: 1bp FLATTER at 130bps
2s/10s: 3bps FLATTER at 229bps
2s/30s: 5bps FLATTER at 309bps
5s/10s: 2bps FLATTER at 99bps
5s/30s: 4bps FLATTER at 179bps
10s/30s: 2bps FLATTER at 80bps