MBS MID-DAY: Fierce Determination to Stay Sideways
By:
Matthew Graham
•
MBS Live: MBS Morning Market Summary
It's been another uneventful session so far with trading levels for MBS and Treasuries both holding inside yesterday's ranges. Treasuries were slightly stronger overnight but moved back to unchanged levels just before the domestic session opened. While the headline on the Durable Goods report was economically bullish, the internal components more than offset it. It ended up being a net-positive for fixed-income, as did the weaker Consumer Sentiment reading. The positivity is fiercely moderate, however, as it merely serves to maintain a sideways range overall since Tuesday's post-NFP rally.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
| Fannie Mae 30YR | ||
|---|---|---|
| FNMA 3.5 | 102-22 | +0-05 |
| FNMA 4.0 | 105-14 | +0-02 |
| FNMA 4.5 | 107-05 | +0-01 |
| Freddie Mac 30YR | ||
|---|---|---|
| FHLMC 3.5 | 102-11 | +0-05 |
| FHLMC 4.0 | 105-02 | +0-03 |
| FHLMC 4.5 | 106-29 | -0-01 |
| Ginnie Mae 30YR | ||
|---|---|---|
| GNMA 3.5 | 103-26 | +0-09 |
| GNMA 4.0 | 106-11 |
+0-05 |
| GNMA 4.5 | 107-30 | +0-03 |
Treasuries:
| 2 YR | 0.3071 | +0.0001 |
| 3 YR | 0.5851 | -0.0049 |
| 5 YR | 1.2830 | -0.0210 |
| 7 YR | 1.8887 | -0.0193 |
| 10 YR | 2.5070 | -0.0140 |
| 30 YR | 3.5990 | -0.0140 |
| Prices as of 10/25/13 12:00PMEST | ||
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.
8:50AM :
ECON: Durable Goods Higher Than Expected, but Weak Internals
- Headline Durables Orders +3.7 vs +2.0 forecast
- Excluding Transportation -0.1 vs +0.5 forecast
- Nondefense, Excluding Aircraft -1.1 vs +0.6 forecast
- Excluding Transportation -0.1 vs +0.5 forecast
- Nondefense, Excluding Aircraft -1.1 vs +0.6 forecast
- Market Reaction: The Nondefense, Ex-Aircraft line item on the Durable Goods report is the more relevant than the headline itself when it comes to assessing the average American business (because a relative minority are buying planes and filling military contracts). The "excluding transportation" line item fills a similar role. In short, the stronger headline was propped up by a smaller number of businesses dealing in bigger-ticket orders while most other businesses were spending less than expected. As such, bond markets actually improved despite the much stronger headline reading.
New orders for manufactured goods in July, down following three consecutive monthly increases, decreased $12.0 billion or 2.4 percent to $485.0 billion, the U.S. Census Bureau reported today. This followed a 1.6 percent June increase. Excluding transportation, new orders increased 1.2 percent.
Shipments, up two of the last three months, increased $5.3 billion or 1.1 percent to $487.6 billion. This followed a 0.3 percent June decrease.
Unfilled orders, up five of the last six months, increased $4.0 billion or 0.4 percent to $1,033.9 billion. This was at the highest level since the series was first published on a NAICS basis in 1992, and followed a 2.1 percent June increase. The unfilled orders-to-shipments ratio was 6.44, up from 6.38 in June.
Inventories, up seven of the last eight months, increased $1.5 billion or 0.2 percent to $629.7 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.2 percent June increase. The inventories-to-shipments ratio was 1.29, down from 1.30 in June.
9:09AM : Bond Markets Unchanged Overnight: Post-Data Rally Short-lived
MBS and Treasuries are currently returning to 8:30am levels after
rallying modestly on the Durable Goods numbers. Those 8:30am levels
were just slightly better than unchanged and we operate close to
unchanged currently.
Overnight Treasuries traded in a super narrow range of 2.5 to 2.522. This sets us up to keep on eye on potential resistance at 2.50 if we happen to rally back. 10's are currently at 2.5161 while Fannie 3.5s are up 3 ticks at 102-20.
There are two remaining economic reports this morning with only Consumer Sentiment at 9:55am standing much of a chance to influence trading levels. Beyond that the stock lever has been in play and likely will continue to be today during the morning hours (meaning that pronounced moves higher or lower in stock prices should translate somewhat to higher or lower bond yields respectively).
Overnight Treasuries traded in a super narrow range of 2.5 to 2.522. This sets us up to keep on eye on potential resistance at 2.50 if we happen to rally back. 10's are currently at 2.5161 while Fannie 3.5s are up 3 ticks at 102-20.
There are two remaining economic reports this morning with only Consumer Sentiment at 9:55am standing much of a chance to influence trading levels. Beyond that the stock lever has been in play and likely will continue to be today during the morning hours (meaning that pronounced moves higher or lower in stock prices should translate somewhat to higher or lower bond yields respectively).
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