MBS MID-DAY: Bond Markets Slide on Light Holiday Volume

By: Matthew Graham •

We often talk about the potential for low volume trading conditions to distort price levels.  The thinking is that when fewer dollars are being traded, it takes fewer dollars to move the representative price of a given security. 

For instance, if we reduce the MBS example to the ridiculous, let's say there were only 2 accounts trading MBS today.  If one of them was in the unfortunate position of absolutely needing to sell, the buyer could pretty well set the price as low as they wanted.

While low volume never increases the likelihood of weakness or strength, it does mean that any tradeflow imbalances will be somewhat magnified.  That's been the case so far today, with the net effect being prices at or near their lowest levels since September.  That said, volume is about a fifth of normal, if that.  So we can't infer much in terms of longer-term momentum.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
94-29 : -0-18
FNMA 3.5
99-09 : -0-15
FNMA 4.0
102-24 : -0-10
Treasuries
2 YR
0.3992 : +0.0162
10 YR
2.9793 : +0.0503
30 YR
3.8921 : +0.0481
Pricing as of 12/24/13 11:58AMEST
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Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- US NOV DURABLES ORDERS +3.5 PCT (CONSENSUS +2.0 PCT) VS OCT -0.7 PCT (PREV -1.6 PCT) "
Matthew Graham  :  "RTRS- U.S. NOV DURABLES EX-TRANSPORTATION ORDERS +1.2 PCT (CONS +0.6 PCT) VS OCT +0.7 PCT (PREV +0.4 PCT) "
Matthew Graham  :  "RTRS- US NOV DURABLES SHIPMENTS +1.8 PCT VS OCT +0.6 PCT; NOV NONDEFENSE CAP SHIPMENTS EX-AIRCRAFT +2.8 PCT, BIGGEST RISE SINCE MARCH 2012, VS OCT -0.4 PCT "
Hugh W. Page  :  "gm - All I want for Xmas is an economy and housing mkt that can be vibrant and growing without constant intervention by central planners. Of course I may be waiting awhile for that...."
Hugh W. Page  :  "And MG - Wonderful holiday wishes to you and your family. Thanks for all you do. You have a huge impact (in a great way) on us all and I appreciate it immensely."
Hugh W. Page  :  "We haven't closed above 3% on the 10 yr in well over 2 yrs right?"
John Sheadel  :  "Markets are closing early today, correct? 2pm EST?"
Hugh W. Page  :  "2.99 in Sept of this yr I think. Let's hope this level acts as a strong ceiling again."
Matthew Graham  :  "Well, it might in the short term, but I think it's sort of a given that we'll drift higher "
Matthew Graham  :  "RTRS- U.S. HOME PRICES +0.5 PCT IN OCTOBER FROM SEPTEMBER - U.S. REGULATOR "
Matthew Graham  :  "RTRS- US NOV SINGLE-FAMILY HOME SALES 464,000 UNIT ANN. RATE (CONS 445,000) VS OCT 474,000 UNIT RATE (PREV 444,000)"
Matthew Graham  :  "RTRS- US OCT HOME SALES RATE HIGHEST SINCE JULY 2008, OCT PCT CHANGE LARGEST SINCE JAN 1992 "
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