MBS MID-DAY: Bond Markets Pummeled by GDP; Bracing for Aftershock from FOMC

By: Matthew Graham •

Bond markets began the day on relatively level ground vs yesterday.  It was, and has been up to GDP to cast the first major vote on whether or not bond markets move on to new highs for 2014 (or lows in terms of yield), or if they would be turned back toward the center of the range. 

Long story short, GDP came in every bit as hot as it was likely to, and bond markets have been selling-off ever since.  Both the data result and the market reaction are no surprise if you read the first post of the week.  If you didn't, here it is. 

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
98-04 : -0-19
FNMA 3.5
101-31 : -0-18
FNMA 4.0
105-06 : -0-13
Treasuries
2 YR
0.5747 : +0.0277
10 YR
2.5396 : +0.0776
30 YR
3.2913 : +0.0693
Pricing as of 7/30/14 12:45PMEST
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Jon Bodan  :  "Been out all AM....boy, I'm glad I locked up everything Monday. Tuesday was a fakeout making me second guess myself...."
Bryce Schetselaar  :  "Love this site. All locked up and very relieved "
Christopher Stevens  :  "I'd say that's a hard bounce off 2.47!"
Tony Cardinal  :  "Sheesh"
Matthew Graham  :  "RTRS- US ADVANCE Q2 GDP +4.0 PCT (CONSENSUS +3.0 PCT) VS Q1 -2.1 PCT; FINAL SALES +2.3 PCT (CONS +2.0 PCT), Q1 -1.0 PCT"
aaron meyer  :  "3.6+"
Brian Chernega  :  "3.9"
Matthew Graham  :  "4+! I'm very scared"
Victor Burek  :  "above 0, below 5.0"
Oliver Orlicki  :  "2.3"
Oliver Orlicki  :  "guesses on gdp"
Matthew Graham  :  "not an assumption. It kind of "is what it is" WM. It had been doing a much better job in 2013, then fell off the wagon in 2014. It's always to be taken with a grain of salt, but will also always mean something if it's far from consensus. This one was exceptionally close to consensus, so it has very little impact, but at the very least, doesn't suggest what last month's did (and correctly so, I might add)"
William McGuirt  :  "so now t he assumption is that adp is not the best nfp forecast anyway"
Matt Hodges  :  "you all have 8 minutes: http://mndne.ws/11pZGyA"
Matt Hodges  :  "time for me to re-read GUTFLOP"
Matt Hodges  :  "better to have locked when you should have floated than floated when you should have locked.... important life lesson"