MBS MID-DAY: Stronger And Sideways Ahead Of Auction

MBS Pricing Snapshot

Bond markets pulled back from Wednesday's sell-off somewhat during the Asian session, ultimately hitting 1.788 (10yr yields) around 3am. Yields then reversed course and headed right back to 1.81 by 8am. This is a fairly narrow range, and could just as easily be considered a "flat" overnight session.

Domestic traders started buying longer maturity Treasuries right around 8am, helping 10's rally into the Jobless Claims data. The data itself, was better than expected--a fact that would normally pose some challenges for bond markets.

Indeed there was a brief (very brief) spat of weakness following the initial print, but it lasted all of 2-3 minutes before reversing course and taking both MBS and Treasuries to their best levels of the morning.

Fannie 3.0 30yr MBS are up 4 ticks at 103-20 and 10yr Treasuries are down 1bp at 1.7913%. S&P futures are about a half a point in the green ahead of the cash open a 9:30. The only other significant scheduled event for the day is the 30yr Bond Auction at 1pm.

- Import Prices -0.5 vs -0.5 consensus
- Export Prices -0.4 vs +0.1 consensus
- Market Reaction: None. This data set is a benchwarmer

The price index for U.S. imports declined 0.5 percent in March, the U.S. Bureau of Labor Statistics reported today, following increases of 0.6 percent in February and 0.5 percent in January. The March decrease was primarily led by a downturn in fuel prices. U.S. export prices fell 0.4 percent in March after rising 0.7 percent in February.

- Claims 346k va 365k Consensus
- Previous week revised higher to 388k
- 4 week average rises to 358k from 355k
- Continued claim 3.079 mln vs 3.066 mln consensus
- Market Reaction: surprisingly resilient. Bond markets stepped back briefly, but are now at their best levels of the morning.

In the week ending April 6, the advance figure for seasonally adjusted initial claims was 346,000, a decrease of 42,000 from the previous week's revised figure of 388,000. The 4-week moving average was 358,000, an increase of 3,000 from the previous week's revised average of 355,000.

The advance seasonally adjusted insured unemployment rate was 2.4 percent for the week ending March 30, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 30 was 3,079,000, a decrease of 12,000 from the preceding week's revised level of 3,091,000. The 4-week moving average was 3,079,250, an increase of 5,250 from the preceding week's revised average of 3,074,000.