Bond Markets Bounce Back After Econ Data

Although MBS and Treasuries rallied a bit after the slightly weaker-than-expected Jobless Claims data this morning, they soon met resistance at familiar levels.  For MBS, Fannie 3.5's hit 101-26 and turned righ back round, moving down to 101-19.  101-26 has been the most prevalent pivot point for Fannie 3.5's for several months and has been particularly prevalent in recent weeks.  10yr Treasuries bounced off slightly less familiar resistance, simple a pivot off yesterday's very highest yields, and even then, yields touched 2.108 only for a few fleeting ticks at yesterday's highs and this morning's lows--barely perceptible on a minute-by-minute chart.

But the rest of the morning's economic data failed to make things any worse for bond markets than they already were, coupled with news that the IMF would downgrade the 2012 outlook (and a reiteration that Italy is not getting a bailout), things begane to change course and MBS Live: released the following alert:

Early Stages of Positive Reprice Potential as MBS Hit Highs 11:07 AM

Fannie 3.5's are at their highs of the day, down only 4 ticks vs 14 ticks earlier this morning, currently 101-27. Certain lenders that priced early enough could soon be considering small reprices for the better, but this alert is more of a "heads-up" than a flat-out reprice alert (more like a "don't lock yet if you were going to"). 

10yr yields are matching the positivity, now challenging yesterday's high yields just over 2.10 as MBS challenge the important 101-26 pivot. if current levels hold or are improved upon, reprices for the better are only a matter of time.

Here's a shot of two of the windows from the MBS Live Dashboard during the times indicated (timestamps at the bottom of the "live pricing" window and at the top of the "current chart" window each update any time new quote information is received).

And some longer term charts for additional context (these were snapped a few minutes after I snapped the video, so you can see how the rally is progressing):

Note that 10yr yields are now back under the teal line at 2.11, but continue to have trouble getting back to 2.072.

There's nothing else on tap for today, but with Non-Farm Payrolls tomorrow morning, markets and lenders alike may play it more safely by not straying exceptionally far from current ranges.