Wednesday 7/2/08 ... Remember the old NBA ad campaign?

By: Matthew Graham •
At A Glance:
  • MBS follows basketball's lead: MBS action, it's gap-tastic!
  • MBS wider again to UST's O/N, extending gappiness problem by 5 ticks
  • UST's leash around MBS neck is almost completely out of slack.
  • So failing an MBS headline shocker, don't expect MBS to stretch spreads too much higher today. 
  • MBS Price WEAKER 2 ticks from close, and dead even from "going out" levels.   
  • Stock futures pointing slightly higher.  FI was a function of equities yesterday, more of the same today
  • ADP reads at -79k. Consensus was for -20k.  No one cares...
  • On Tap: Factory Orders expected to decline .5% to +0.6% MoM change
  • QUICK LOCK GUIDE: Float into Factory orders report.  Rest of the day, we'll take cues from stocks (again)
  • VIGILANCE: LOW: many of us locked on yesterday's losses.  If you didn't, you are likely floating into tomorrow anyway.
abbreviations guide (ongoing list): 
  • MBS -                 
    • Mortgage Backed Security
  • MDPC-
    • Mid Day Price Change (plus means for the better, minus for the worse)
  • DOW or DJIA -    
    • Dow Jones Industrial Average
  • Ticks-                   
    • 1/32nds of bond pricing.  8 ticks=8/32nds=.25 in cost (YSP or discount)
  • DoD, YoY, MoM-  
    • Day over day, year over year, month over month, etc..
  • O/N-                   
    • Overnight
  • Coupon-               
    • The "interest rate' of the MBS
  • 6.0's, 5.5's           
    • always means FNMA 30yr Fixed MBS with a coupon of that number.  6.0's = 6.0% coupon rate MBS
  • PCE-                    
    • Personal Consumption Expenditures
  • UST-                    
    • United States Treasury Bonds.  5UST = 5 year, 10UST = 10 year, etc.. 
  • NAPM (PMI)         
    • National association of purchasing management (Purchasing Manager's Index)
  • ISM (MFG)           
    • Institute for Supply Management (mfg: manufacturing)
  • Wide/Gap/Gappy  
    • refers to the wideness or gap between treasury yields and MBS yields.
  • "Going Out"          
    • 4:45PM EST.  Official Close is 3pm EST 
  • FI                        
    • "fixed income."  For our purposes, will simply refer to treasuries and MBS 
  • NFP                    
    • Non-Farm Payrolls.  Key part of employment report.  Most meaningful gauge of labor market
  • ADP                    
    • ADP private payrolls, some feel a precursor to NFP, but historically quasi-accurate at best.