MBS MID-DAY: Bonds Continue Biding Time Ahead of ECB

By: Matthew Graham

While today had a chance to kick off the bigger potential volatility expected during the second half of the week, an uneventful reaction to election results and a close-to-consensus ADP report clearly haven't stepped up to the plate.  Investigating and assigning causality to today's bond market movements is really unnecessary considering no new ground is being broken.  Both Treasuries and MBS remain inside their weakest recent levels despite having moved slightly weaker from yesterday.

If you want to stop reading, there's really not much more to it than that.

Otherwise, here's some more:

Bonds are bored and waiting for tomorrow's ECB Announcement.  There's been more and more analysis suggesting the ECB--or rather, Draghi himself--was to blame for October's mega-swoon in yields and stocks.  The theory is that markets saw Draghi as desperately trying to make a case that the ECB was doing enough to stimulate growth, but all the while remaining hopelessly castrated by Germany's refusal to allow the ECB to directly buy sovereign debt.  Ergo, those "global growth concerns" kicked in and markets panicked. 

While that may be a bit of an oversimplification of reality, the underlying dilemma of Draghi vs Germany is front and center.  Bond markets are intensely interested in every little development in that saga, so it's no surprise to see another day without anything but safe, range-bound moves.  A big beat/miss in ADP and ISM Non-Manufacturing would have been our only chances, and we got neither.


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
99-25 : -0-04
FNMA 3.5
103-07 : -0-03
FNMA 4.0
106-03 : -0-02
Treasuries
2 YR
0.5260 : +0.0080
10 YR
2.3590 : +0.0240
30 YR
3.0720 : +0.0230
Pricing as of 11/5/14 12:50PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:55AM  :  Bond Markets Weaker; Elections Getting Some Blame, Really?

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Sung Kim  :  "Me too Jude "
Jude Bridwell  :  "Have a bad feeling about Friday's jobs number"
Matthew Graham  :  "RTRS- ISM NON-MANUFACTURING EMPLOYMENT HIGHEST SINCE AUGUST 2005"
Matthew Graham  :  "RTRS- ISM NON-MANUFACTURING PMI LOWEST SINCE JUNE"
Matthew Graham  :  "RTRS - ISM NON-MANUFACTURING EMPLOYMENT INDEX 59.6 IN OCT VS 58.5 IN SEPT"
Matthew Graham  :  "RTRS - ISM REPORT ON U.S. NON-MANUFACTURING SECTOR SHOWS PMI 57.1 IN OCT (CONSENSUS 58.0) VS 58.6 IN SEPT"
Victor Burek  :  "TrimTabs Investment Research said it estimated the U.S. economy added 314,000 new jobs in October"
Steve Schneider  :  "Great work on the report this morning. Helped to understand that ADP is attempting to predict a madman - not necessarily reporting raw data."
Matthew Graham  :  "Boring"
Matthew Graham  :  "RTRS- REUTERS CONSENSUS FORECAST FOR ADP PAYROLL CHANGE FOR OCT WAS FOR INCREASE OF 220,000 JOBS"
Matthew Graham  :  "RTRS - ADP NATIONAL EMPLOYMENT REPORT SHOWS U.S. EMPLOYMENT INCREASED BY 230,000 PRIVATE SECTOR JOBS IN OCTOBER"