MBS MID-DAY: Bond Markets Fighting Back Ahead of Auction
By:
Matthew Graham
•
MBS Live: MBS Morning Market Summary
MBS are languishing just over a quarter of a point weaker from yesterday's latest levels (which were also the weakest of the day). Overnight markets were unkind to bond markets with the key source of motivation being plans for a stop-gap debt-ceiling bill said to be in the works in the House. This isn't necessarily a satisfying scapegoat in and of itself, but the technical landscape and 30yr Auction round out the cast of potential bad actors.
Paradoxically, the much-weaker-than-expected Jobless Claims report this morning was of no use to bond markets. There are several synergistic reasons for this, not the least of which being a big influx of claims from California owing to computer system upgrades. The Government Shutdown has also made for a glut of of unemployment filings from furloughed workers. Markets are cognizant of the fact that any retroactive pay will pay back the the unemployment dollars and the end of the shutdown itself will greatly reduce the number of filings. So everything has to be taken with a grain of salt on the weekly claims numbers.
The best hope continues to be that some of the current weakness owes itself to the upcoming 30yr Bond Auction. Bond markets have been "nervous" for lack of a better term this week and some of that nervousness could ease after the auction. If the results are close to expectations, that would result in some improvements, but negative results could leave the pressure in place.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
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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.
8:49AM :
ECON: Jobless Claims Much Weaker Than Expected, but Markets Don't Care
- Claims 374k vs 310k forecast, 308k last week
- Half of 66k rise due to California computer conversion
- About 15k due to non-federal workers 'adversely affected' by shutdown
Market reaction: The higher-than-expected total is being completely shrugged off and bond markets have been unchanged or worse since data, after a short-lived stab into better territory that reversed inside the first minute.
In the week ending October 5, the advance figure for seasonally adjusted initial claims was 374,000, an increase of 66,000 from the previous week's unrevised figure of 308,000. The 4-week moving average was 325,000, an increase of 20,000 from the previous week's unrevised average of 305,000.
The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending September 28, unchanged from the prior week's revised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 28 was 2,905,000, a decrease of 16,000 from the preceding week's revised level of 2,921,000. The 4-week moving average was 2,858,750, an increase of 22,500 from the preceding week's revised average of 2,836,250.
- Half of 66k rise due to California computer conversion
- About 15k due to non-federal workers 'adversely affected' by shutdown
Market reaction: The higher-than-expected total is being completely shrugged off and bond markets have been unchanged or worse since data, after a short-lived stab into better territory that reversed inside the first minute.
In the week ending October 5, the advance figure for seasonally adjusted initial claims was 374,000, an increase of 66,000 from the previous week's unrevised figure of 308,000. The 4-week moving average was 325,000, an increase of 20,000 from the previous week's unrevised average of 305,000.
The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending September 28, unchanged from the prior week's revised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 28 was 2,905,000, a decrease of 16,000 from the preceding week's revised level of 2,921,000. The 4-week moving average was 2,858,750, an increase of 22,500 from the preceding week's revised average of 2,836,250.
8:30AM :
Bond Markets Weaker Overnight; Jobless Claims Coming Up
10yr yields traded as high as 2.716 overnight--levels not seen since Sep 23rd. A possible stop-gap debt ceiling deal (that would kick the can into 2014) was one of the sources of negativity for bond markets (and positivity for equities). S&P futures rose roughly 15 points from yesterday's latest levels.
The technical landscape also bears consideration, with momentum indicators shifting bearishly at yesterday's close.
MBS opened almost a quarter of a point weaker with Fannie 3.5s pushing 101-00. Jobless Claims WILL report as normal in about 15 seconds and should provide our next cue for the morning. It will have to be taken with a grain of salt, however, due to uncertainty over furloughed workers.
The technical landscape also bears consideration, with momentum indicators shifting bearishly at yesterday's close.
MBS opened almost a quarter of a point weaker with Fannie 3.5s pushing 101-00. Jobless Claims WILL report as normal in about 15 seconds and should provide our next cue for the morning. It will have to be taken with a grain of salt, however, due to uncertainty over furloughed workers.
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.
Matthew Graham : "RTRS-US HOUSE REPUBLICANS UNDECIDED ON DEBT-LIMIT STRATEGY; SIX-WEEK INCREASE STILL BEING WEIGHED-AIDE"
Victor Burek : "so those computer conversions led to the low claims in the prior weeks?"
Matthew Graham : "RTRS- ABOUT 15,000 OF INITIAL CLAIMS ATTRIBUTABLE TO NON-FEDERAL WORKERS ADVERSELY AFFECTED BY GOVERNMENT SHUTDOWN-US LABOR DEPT "
Matthew Graham : "RTRS - ABOUT HALF OF 66,000 RISE IN INITIAL CLAIMS DUE TO CALIFORNIA STILL WORKING THROUGH COMPUTER CONVERSIONS-US LABOR DEPT "
Matthew Graham : "RTRS- US JOBLESS CLAIMS ROSE TO 374,000 OCT 5 WEEK, HIGHEST SINCE MARCH (CONSENSUS 310,000) FROM 308,000 PRIOR WEEK (PREVIOUS 308,000) "
Andy Pada : "what may be lost in this number are the private sector layoffs and those seeking benefits."
Matthew Graham : "It may have to be taken with a grain of salt. Any furloughed workers eligible for U/E (only those sent home) will have to pay back U/E after an appropriations bill or continuing resolution is passed."
Andy Pada : "will it even matter..."
Andy Pada : "jobless claims should be a huge miss, no?"
Oliver Orlicki : "2.72?? Range has been broken"
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