MBS MID-DAY: Bond Markets in Rally Mode After Visit From Old Friend

By: Matthew Graham •

Geopolitical risk is an old friend to bond markets.  When prospects for awful things flare up at home and abroad, money tends to flow out of stocks and into bonds.  That's been the case so far today as Treasury yields and stock prices have plunged in unison after a series of headlines out of Ukraine suggesting some semblance of civil war. 

Before that, bonds, including MBS, started out in weaker territory, but did a decent job of holding their ground.  Weaker-than-expected manufacturing data from the NY Fed may have helped to some extent as prices generally rose from there on out.

At present, bond markets continue delving into positive territory.  Treasuries are already well past yesterday's best levels and MBS are close to matching theirs.  There is no other significant scheduled data on tap, and its fair to assume that markets will remain on the lookout for additional Ukraine headlines.

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
97-14 : +0-11
FNMA 3.5
101-14 : +0-09
FNMA 4.0
104-18 : +0-06
Treasuries
2 YR
0.3670 : +0.0000
10 YR
2.6103 : -0.0287
30 YR
3.4495 : -0.0345
Pricing as of 4/15/14 12:03PMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:35AM  :  Bond Markets Jump into Positive Territory
8:51AM  :  Bond Markets Holding Ground at Slightly Weaker Levels After Data
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- U.S. MARCH CPI +0.2 PCT (+0.2003; CONSENSUS +0.1 PCT), EXFOOD/ENERGY +0.2 PCT (+0.2041; CONS +0.1 PCT)"
Matthew Graham  :  "RTRS- NY FED'S EMPIRE STATE EMPLOYMENT INDEX AT +8.16 IN APRIL VS +5.88 IN MARCH"
Sung Kim  :  "cpi came in a little hot?"
Sung Kim  :  "but of course cpi/ppi dont matter, so forget the question"
Matthew Graham  :  "yeah, interesting times, in that it seems that some more attention might be paid to inflation in the coming months, but much like the prospect of rising yields, the question is one of sustainability. Maybe I'm missing something about the recovery, but how can higher prices or yields be sustained in any meaningful way? 3% 10yr and 1.8 CPI? sure, but around 3.5% and 2.0 CPI, seems like things would get dicey. "
Matthew Graham  :  "RTRS- U.S. APRIL NAHB HOUSING MARKET INDEX 47 (CONSENSUS 50) VERSUS REVISED 46 IN MARCH"
Victor Burek  :  "mg...any news? Ukraine flairing up?"
Victor Burek  :  "stocks falling fast too"
Matthew Graham  :  "could be Ukraine-related as well. Some earlier wires and one story suggest impending civil war. Another more recent wire says Ukrainian government has identified Russian military in Slovyansk"
Gus Floropoulos  :  "Ukraine drama has been downplayed throughout the last couple of weeks. "
Gus Floropoulos  :  "not saying it should be a major market mover, but it's real geopolitical risk"