MBS MID-DAY: Bond Markets Pull Another Petal; Love's Turn Today
By:
Matthew Graham
•
MBS Live: MBS Morning Market Summary
Bond markets had been waiting on the past three days of data to better assess Bernanke's potential affection in the coming months as the tapering debate plays out. They've managed to make the cliche of the "pining lover" look even-tempered by comparison--quickly changing their stance between extremes based on the incoming data. On Wednesday morning, after the ADP and GDP reports: "he loves me not!" On Wed afternoon after the semi-dovish FOMC announcement: "he loves me!" After another "loves me not" on Thursday, today's petal has been good for another mood swing. Almost all of yesterday's losses have been undone after a slightly weaker-than-expected jobs report, but the mental state of love-sick bond markets is no more convincing as 10's refuse to meaningfully commit to anything under 2.62. What we're left with is a solid morning of improvement for Treasuries and MBS, but one that prolongs the debate over the tapering outlook as opposed to one that helps resolve it. It's not that we want to see bond markets put the flower down, get off the couch, and go live their lives at higher yields, just that it would have been nicer to have a rally unrestrained by lingering uncertainty instead of the mood swings.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
|
|
|
||||||||||||
| Pricing as of 11:06 AM EST | ||||||||||||||
Morning Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this morning.
10:44AM :
ECON: Factory Orders Weaker Than Expected
- June Factory Orders +1.5 vs +2.3 consensus
- excluding aircraft and defense +0.9 vs +0.7 previous
Market Reaction: mild net positive for bond markets. 10's are still hanging around just under the 2.62 inflection point.
New orders for manufactured durable goods in June increased $9.9 billion or 4.2 percent to $244.5 billion, the U.S. Census Bureau announced today. This increase, up four of the last five months, followed a 5.2 percent May increase and was at the highest level since the series was first published on a NAICS basis in 1992. Excluding transportation, new orders increased slightly. Excluding defense, new orders increased 3.0 percent.
Transportation equipment, also up four of the last five months, led the increase, $9.9 billion or 12.8 percent to$87.1 billion. This was led by nondefense aircraft and parts, which increased $6.5 billion.
- excluding aircraft and defense +0.9 vs +0.7 previous
Market Reaction: mild net positive for bond markets. 10's are still hanging around just under the 2.62 inflection point.
New orders for manufactured durable goods in June increased $9.9 billion or 4.2 percent to $244.5 billion, the U.S. Census Bureau announced today. This increase, up four of the last five months, followed a 5.2 percent May increase and was at the highest level since the series was first published on a NAICS basis in 1992. Excluding transportation, new orders increased slightly. Excluding defense, new orders increased 3.0 percent.
Transportation equipment, also up four of the last five months, led the increase, $9.9 billion or 12.8 percent to$87.1 billion. This was led by nondefense aircraft and parts, which increased $6.5 billion.
8:53AM :
ALERT ISSUED:
ECON: Payrolls Weaker Than Expected; Bond Markets Rally
- NFP +162k vs +184 f'cast
- June revised to 188k from 195k
- May revised to 176k from 195k
- Labor force participation rate: 63.4 vs 63.5 previously
- Private payrolls +161 vs +189 f'cast
- Avg workweek 34.4 vs 34.5 previously
- Unemployment rate: 7.4 pct vs 7.5 f'cast, 7.6 previously
Market Reaction: Initial positive pop in both MBS and Treasuries saw 10's hit firm resistance at the 2.62 inflection point, they've since circled back to test a breakout in good volume and are currently at 2.613, which is still a bit too close to "confirm the breakout test." Fannie 3.5s are up 27 ticks and 4.0s are up 23 ticks to 103-27--almost back to yesterday's opening levels.
Total nonfarm payroll employment increased by 162,000 in July, and the unemployment rate edged down to 7.4 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in retail trade, food services and drinking places, financial activities, and wholesale trade.
The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour in July to 34.4 hours. In manufacturing, the workweek decreased by 0.2 hour to 40.6 hours, and overtime declined by 0.2 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.6 hours.
In July, average hourly earnings for all employees on private nonfarm payrolls edged down by 2 cents to $23.98, following a 10-cent increase in June. Over the year, average hourly earnings have risen by 44 cents, or 1.9 percent. In July, average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $20.14.
The change in total nonfarm payroll employment for May was revised from +195,000 to +176,000, and the change for June was revised from +195,000 to +188,000. With these revisions, employment gains in May and June combined were 26,000 less than previously reported.
- June revised to 188k from 195k
- May revised to 176k from 195k
- Labor force participation rate: 63.4 vs 63.5 previously
- Private payrolls +161 vs +189 f'cast
- Avg workweek 34.4 vs 34.5 previously
- Unemployment rate: 7.4 pct vs 7.5 f'cast, 7.6 previously
Market Reaction: Initial positive pop in both MBS and Treasuries saw 10's hit firm resistance at the 2.62 inflection point, they've since circled back to test a breakout in good volume and are currently at 2.613, which is still a bit too close to "confirm the breakout test." Fannie 3.5s are up 27 ticks and 4.0s are up 23 ticks to 103-27--almost back to yesterday's opening levels.
Total nonfarm payroll employment increased by 162,000 in July, and the unemployment rate edged down to 7.4 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in retail trade, food services and drinking places, financial activities, and wholesale trade.
The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour in July to 34.4 hours. In manufacturing, the workweek decreased by 0.2 hour to 40.6 hours, and overtime declined by 0.2 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 33.6 hours.
In July, average hourly earnings for all employees on private nonfarm payrolls edged down by 2 cents to $23.98, following a 10-cent increase in June. Over the year, average hourly earnings have risen by 44 cents, or 1.9 percent. In July, average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $20.14.
The change in total nonfarm payroll employment for May was revised from +195,000 to +176,000, and the change for June was revised from +195,000 to +188,000. With these revisions, employment gains in May and June combined were 26,000 less than previously reported.
Live Chat Featured Comments
A recap of the featured comments from the MBS Live Dashboard's Live Chat feature, utilized by hundreds of industry professionals each day.
John Tassios : "CS, they can't taper now, in order for this to be orderly in markets they need to mention taper process at least 2 months in advance. first taper may be pushed out to Dec or even Jan 2014"
Andy Pada : "i'm 75 bps better from 8:30 am (pre #) to 8:38 am"
John Tassios : "Robert, MBS may be waiting for volatitlity to settle down in TSY markets before they buy MBS"
Matthew Graham : "no liquidity in MBS right now. we should get caught up in a few"
Robert Rippy : "Why the disconnect between MBS and teasuries MG?"
MMNJ : "161K is better than 261K"
Matthew Graham : "it may be a mild positive for today's locks, but it's not a game-changer. Just a game-confuser. Not good."
Matthew Graham : "this was a really boring report and it makes life very uncertain for bond markets for the next month. I am not excited."
Moshe Berg : "Why aren't we up 20??"
Matthew Graham : "RTRS- U.S. JULY JOBLESS RATE LOWEST SINCE DEC 2008 "
Victor Burek : "participation rate drops again"
Matthew Graham : "RTRS - U.S. JULY AVERAGE HOURLY EARNINGS ALL PRIVATE WORKERS -0.1 PCT (CONS +0.2 PCT) VS JUNE +0.4 PCT (PREV +0.4 PCT), TO $23.98 VS JUNE $24.00; JULY YEAR-ON-YEAR EARNINGS +1.9 PCT "
Oliver Orlicki : "revisions ar good for us as well"
Victor Burek : "part time jobs"
Jason Sheaffer : "Rate dropped, all that matters, looks good on the news"
Matthew Graham : "RTRS - US JULY PRIVATE SECTOR JOBS +161,000 (CONS +189,000), JUNE +196,000 (PREV +202,000)"
Matthew Graham : "RTRS - U.S. LABOR FORCE PARTICIPATION RATE 63.4 PCT IN JULY VS 63.5 PCT IN JUNE "
Victor Burek : "avg work week fell"
Christopher Stevens : "how about that 10YR correction"
Matthew Graham : "RTRS - U.S. JULY JOBLESS RATE 7.4 PCT (CONSENSUS 7.5 PCT) VS JUNE 7.6 PCT (PREV 7.6 PCT) "
Matthew Graham : "RTRS- U.S. JULY NONFARM PAYROLLS +162,000 (CONSENSUS +184,000) VS JUNE +188,000 (PREV +195,000), MAY +176,000 (PREV +195,000) "
Edgar - Trim Tab Special : "Here's a good read: http://www.businessweek.com/news/2013-08-01/fortress-to-blackstone-say-now-is-time-to-sell-as-markets-rally"
Read what our user's have to say about MBS Live on LinkedIn.
» Start a two week free trial of MBS Live.