MBS RECAP: Super Flat Day... Not at all What You'd Expect

By: Matthew Graham •

If the official end of QE is to be an inspirational moment for bond markets in the bigger picture, you wouldn't know it based on how trading has gone since then.  A case is rapidly building for the news being fully priced in ahead of time and actual whipsaw effect happening a few weeks earlier.  Whatever the case, inspiration was lacking and continues its absence today.

MBS were able to hold super steady today at slightly stronger levels.  But here too, the improvement was fairly uninspired, and may even have more to do with the fact that rates had simply spent so many days in a row moving higher after October 15th's big drop. That can happen sometimes.

One thing's for sure though: the traditional motivations were irrelevant today. Rates are typically pressured higher by stronger economic data, but this morning's news that 3rd Quarter GDP beat estimates didn't have a material effect. Instead, the bond markets were more in tune with European bond markets, which were improving due to weak inflation data.

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
100-04 : +0-03
FNMA 3.5
103-15 : +0-05
FNMA 4.0
106-06 : +0-04
Treasuries
2 YR
0.4730 : -0.0160
10 YR
2.3080 : -0.0130
30 YR
3.0480 : -0.0050
Pricing as of 10/30/14 4:58PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:44PM  :  Bond Market Volatility on Japanese Headlines; MBS Back to Highs
9:28AM  :  Bond Markets Dig in With Help From Europe
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Tim McNerney  :  "it's been about jobs since 2008 and still is...can;t have no good jobs being created, income dropping and cpi rising and expect people to jump into home ownership OR get qualified"
Dave Pressel  :  "http://mndne.ws/1xFzvPe"
Victor Burek  :  "i think the fed has been pretty clear they think the jobs pictures isn't as good as the rate"
Matthew Graham  :  "we change what we think about how they will act."
Matthew Graham  :  "in other words, we don't change what we think about the economy based on their crappy forecasts"
Matthew Graham  :  "instead, they say "oh man, the Fed is really thinking too bullishly about the economy, so when it turns out to be less bullish than they think, maybe they won't raise rates as fast.""
Matthew Graham  :  "people don't see the Fed's bullish forecasts and say "oh man, I need to go buy more stocks and sell bonds because what if the Fed is right?!""
Matthew Graham  :  "so let me retry"
Ray J  :  "that melted my brain MG"
Matthew Graham  :  "I don't know that it's as much about trusting their forecasts as it is the interpretation of what their forecasts vs reality mean for the path of monetary policy. "
Matt Hodges  :  "reverse calling of wolf. why do we trust them and their rosy forecasts"
Ray J  :  "hows that go, sometimes it is easier to ask for forgiveness than permission"
Matt Hodges  :  "she did in September"
Victor Burek  :  "don't see her doing that"
Matt Hodges  :  "Janet will acknowledge that they made misjudgements on the economy and jobs in December's presser"