MBS MID-DAY: Hovering Near Unchanged to Slightly Weaker Levels

MBS Pricing Snapshot

Treasuries and MBS moved into weaker territory at the 9:30am opening bell for stocks. MBS trading has been less than less than liquid, but 4.0s were briefly as low as 102-20 (currently 102-22), down from 102-26 highs.

The bounce back comes after Treasuries put in a supportive bounce at 2.867. Any price action within this range for MBS likely keeps negative reprice risk out of the picture, though that's a safer assumption here at 102-22 than it was at 102-20.

Additionally, the brief swoon and recovery give us a good line in the sand to watch for any potential reprice risk later today. In other words, falling past 102-20 would be a good early indicator of risk if it happens later in the session.

Asian Trading hours saw a modest amount of weakness for Treasuries with 10yr yields rising from 2.86 to 2.88. This ended up being the range for the rest of the overnight session despite stronger economic data during European hours.

Treasuries hit the domestic session in just slightly weaker territory, but a modest rally was underway even before the Trade Deficit data. That said, the data had a small positive impact.

10yr yields are down to 2.854 and Fannie 4.0s are up 3 ticks to 102-26 after opening down 2 ticks at 102-20. There is no more significant data on the calendar today.

- Trade Deficit $39.15 bln vs $38.7 bln forecast
- Exports -0.6 vs +2.2 previously
- Imports +1.6 vs -2.2 previously
- China Trade gap $30.08 vs $26.65, largest on record
- Oil import price $97.07 vs $96.93<

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total July exports of $189.4 billion and imports of $228.6 billion resulted in a goods and services deficit of $39.1 billion, up from $34.5 billion in June, revised. July exports were $1.1 billion less than June exports of $190.5 billion. July imports were $3.5 billion more than June imports of $225.1 billion.

In July, the goods deficit increased $4.5 billion from June to $58.6 billion, and the services surplus decreased $0.1 billion from June to $19.4 billion. Exports of goods decreased $1.1 billion to $132.7 billion, and imports of goods increased $3.4 billion to $191.3 billion. Exports of services were virtually unchanged at $56.7 billion, and imports of services increased $0.1 billion to $37.3 billion.

The goods and services deficit decreased $4.3 billion from July 2012 to July 2013. Exports were up $6.1 billion, or 3.3 percent, and imports were up $1.8 billion, or 0.8 percent.