MBS MID-DAY: Holding Ground Near Highs After Yellen Hearing
By:
Matthew Graham
•
MBS Live: MBS Morning Market Summary
Janet Yellen just wrapped up the Q&A portion of her confirmation hearing with the Senate Banking committee. It would have been shorter, but most Senators had to do that "stuff" politicians do (you know, when they ask "questions" that are actually politically motivated, self-serving statements, only tangentially related to the matter at hand). That part of the hearing was as unctuous and uncomfortable as such things always are, but Yellen did a great job. Bond markets agreed, and added to the gains that had already carried over from yesterday's session. MBS are currently an eighth of a point higher than yesterday's best levels.
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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Pricing as of 11:04 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.
9:25AM :
Post-Data Gains Erased as Bond Markets Hold Range Ahead of Yellen
The overnight session largely represented a circling of the wagon as Treasuries avoided breaking any higher or lower than the highs and lows seen before and after Yellen's prepared remarks yesterday afternoon. That connotes a range of roughly 2.734 to 2.706 in 10yr yields.
The morning's economic data resulted in moderate improvement for bond markets, briefly testing the lower end of that range, but we're now breaking out the other side with 10's up to 2.737 ahead of the domestic stock market open.
MBS opened just a few ticks weaker than yesterday afternoon's ballistic closing levels. They underwent the same sparkle and fade seen in Treasuries and are now 3 ticks lower at 101-04 in Fannie 3.5s.
There are no remaining economic reports this morning and Yellen's confirmation hearing begins at 10am. This will likely start with plenty of inconsequential senatorial droning as well as Yellen's prepared remarks released yesterday. At some point in the 10am hour, the actually relevant Q&A period should begin.
The morning's economic data resulted in moderate improvement for bond markets, briefly testing the lower end of that range, but we're now breaking out the other side with 10's up to 2.737 ahead of the domestic stock market open.
MBS opened just a few ticks weaker than yesterday afternoon's ballistic closing levels. They underwent the same sparkle and fade seen in Treasuries and are now 3 ticks lower at 101-04 in Fannie 3.5s.
There are no remaining economic reports this morning and Yellen's confirmation hearing begins at 10am. This will likely start with plenty of inconsequential senatorial droning as well as Yellen's prepared remarks released yesterday. At some point in the 10am hour, the actually relevant Q&A period should begin.
8:47AM :
ECON: Trade Gap Wider Than Expected
- Trade Deficit $41.78 bln vs $39 bln forecast
- Exports -0.2, imports +1.2, both unchanged previously
- Trade gap largest since May
- Slightly negative connotation for growth; potentially beneficial to bond markets.
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total September exports of $188.9 billion and imports of $230.7 billion resulted in a goods and services deficit of $41.8 billion, up from $38.7 billion in August, revised. September exports were $0.4 billion less than August exports of $189.3 billion. September imports were $2.7 billion more than August imports of $228.0 billion.
- Exports -0.2, imports +1.2, both unchanged previously
- Trade gap largest since May
- Slightly negative connotation for growth; potentially beneficial to bond markets.
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total September exports of $188.9 billion and imports of $230.7 billion resulted in a goods and services deficit of $41.8 billion, up from $38.7 billion in August, revised. September exports were $0.4 billion less than August exports of $189.3 billion. September imports were $2.7 billion more than August imports of $228.0 billion.
8:41AM :
ECON: Productivity and Costs Lower Than Expected
- Productivity +1.9 vs +2.2 forecast
- Labor Costs -0.6 vs +0.2 forecast
Nonfarm business sector labor productivity increased at a 1.9 percent annual rate during the third quarter of 2013, the U.S. Bureau of Labor Statistics reported today. The increase in productivity reflects increases of 3.7 percent in output and 1.7 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2012 to the third quarter of 2013, productivity was unchanged as a 1.8 percent increase in output was matched by a 1.8 percent increase in hours worked.
Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.
Unit labor costs in nonfarm businesses decreased 0.6 percent in the third quarter of 2013, while hourly compensation increased 1.3 percent. Unit labor costs rose 1.9 percent over the last four quarters.
BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them.
- Labor Costs -0.6 vs +0.2 forecast
Nonfarm business sector labor productivity increased at a 1.9 percent annual rate during the third quarter of 2013, the U.S. Bureau of Labor Statistics reported today. The increase in productivity reflects increases of 3.7 percent in output and 1.7 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2012 to the third quarter of 2013, productivity was unchanged as a 1.8 percent increase in output was matched by a 1.8 percent increase in hours worked.
Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.
Unit labor costs in nonfarm businesses decreased 0.6 percent in the third quarter of 2013, while hourly compensation increased 1.3 percent. Unit labor costs rose 1.9 percent over the last four quarters.
BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them.
8:36AM :
ECON: Jobless Claims Higher Than Expected
- Claims 339k vs 330k forecast
- Previous week revised to 341k from 336k
- Continued Claims 2.874m vs 2.87m forecast
- Market Reaction: Bond markets slightly stronger so far.
In the week ending November 9, the advance figure for seasonally adjusted initial claims was 339,000, a decrease of 2,000 from the previous week's revised figure of 341,000. The 4-week moving average was 344,000, a decrease of 5,750 from the previous week's revised average of 349,750. The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending November 2, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 2 was 2,874,000, unchanged from the preceding week's revised level of 2,874,000. The 4-week moving average was 2,866,250, a decrease of 2,000 from the preceding week's revised average of 2,868,250.
- Previous week revised to 341k from 336k
- Continued Claims 2.874m vs 2.87m forecast
- Market Reaction: Bond markets slightly stronger so far.
In the week ending November 9, the advance figure for seasonally adjusted initial claims was 339,000, a decrease of 2,000 from the previous week's revised figure of 341,000. The 4-week moving average was 344,000, a decrease of 5,750 from the previous week's revised average of 349,750. The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending November 2, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 2 was 2,874,000, unchanged from the preceding week's revised level of 2,874,000. The 4-week moving average was 2,866,250, a decrease of 2,000 from the preceding week's revised average of 2,868,250.
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.
Dave Pressel : ""you had me at bond buying""
Christopher Stevens : "I think I am in love"
Matthew Graham : "RTRS- YELLEN SAYS BELIEVES BENEFITS OF BOND BUYING EXCEED COSTS "
Matthew Graham : "RTRS- YELLEN SAYS IMPORTANT NOT TO REMOVE BOND-BUYING SUPPORT WHEN RECOVERY IS FRAGILE "
Matthew Graham : "RTRS- YELLEN SAYS THERE ARE DANGERS IN ENDING QE TOO EARLY, AND IN KEEPING IT IN PLACE TOO LONG "
Matthew Graham : "http://www.c-span.org/Events/Senate-Hearing-on-Federal-Reserve-Nomination/10737442622-1/"
Christopher Stevens : "looking forward to the Yellen Q&A"
Christopher Stevens : "as long as we stay below 2.74 I am happy"
Matthew Graham : "2.734 was yesterday afternoon's latest "pre-yellen" high yield. Seems like a decent enough guidepost for a sideways range, though 2.742 got more play time earlier in the day. MBS would be more open to interpretations as there's a big gap between yesterday's predominant highs and this morning's lows. Really, the only thing that would be decidedly negative would be moving all the way through that gap (below 101-01)."
Jeff Anderson : "All is well....do not flee. What's the next lower level, i.e. current floor, MG? Is that what we bounced off of a bit?"
Christopher Stevens : "quite the turnaround in the 10YR"
Hugh W. Page : "FYI MG the new mobile site looks awesome on my new Android phone :) Well done"
Matthew Graham : "RTRS- PLOSSER SAYS SHOULD LIMIT FED’S DISCRETION IN MONETARY POLICYMAKING BY REQUIRING A SYSTEMATIC, RULE-LIKE APPROACH "
Matthew Graham : "RTRS- PLOSSER SAYS SHOULD LIMIT FED PURCHASES TO TREASURY SECURITIES AND RETURN BALANCE SHEET TO AN ALL-TREASURY PORTFOLIO "
Matthew Graham : " RTRS- FED'S PLOSSER SAYS SHOULD LIMIT FED’S MONETARY POLICY GOALS TO FOCUS SOLELY, OR AT LEAST PRIMARILY, ON PRICE STABILITY "
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