MBS MID-DAY: Decent Consolidation After Early Weakness; Push and Pull From Data

By: Matthew Graham •

Overnight and early domestic trading were unkind to bond markets.  Global PMI data was generally in line with expectations or slightly stronger.  Treasury yields drifted slightly higher by the open resulting in MBS opening an eighth of a point weaker from Friday's lofty closing levels.

The morning's first data was mixed, but bond markets saw something they didn't like--probably the fact that incomes beat the forecast +0.3 vs +0.2.  Overnight gains doubled after that with 10yr yields hitting 1.712 briefly and Fannie 3.0s down to 103-06.  Weakness at the domestic stock open helped fuel a bounce and a miss in the 10am ISM numbers provided additional momentum.

Ultimately, we're left with a consolidation pattern honing in on levels right in the middle of Friday's range--not to bad considering the absence of month-end bond buying positivity.

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
103-11 : -0-05
FNMA 3.5
105-20 : -0-02
FNMA 4.0
107-04 : -0-01
Treasuries
2 YR
0.4760 : +0.0233
10 YR
1.6790 : +0.0400
30 YR
2.2560 : +0.0331
Pricing as of 2/2/15 12:32PMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:17AM  :  ALERT ISSUED: Bond Markets on the Run after Decent European Data and Month-End Reversal
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- US DEC CONSTRUCTION SPENDING +0.4 PCT (CONSENSUS +0.7 PCT) TO $982.1 BLN, VS NOV -0.2 PCT (PREV -0.3 PCT)"
Matthew Graham  :  "RTRS - ISM U.S. MANUFACTURING PRICES PAID INDEX LOWEST SINCE APRIL 2009"
Matthew Graham  :  "RTRS- ISM U.S. MANUFACTURING ACTIVITY INDEX LOWEST SINCE JANUARY 2014"
Matthew Graham  :  "RTRS - ISM U.S. MANUFACTURING NEW ORDERS INDEX 52.9 IN JAN VS 57.8 IN DEC"
Matthew Graham  :  "RTRS- ISM U.S. MANUFACTURING ACTIVITY INDEX 53.5 IN JAN (CONSENSUS 54.5) VS 55.1 IN DEC"
Kenneth Crute  :  "if the loan payments are more than 20% of her gross income she may qualify for a forbearnce, but if I were a UW that might make me a little nervous "
Kenneth Crute  :  "financial hardship or illness forbearance not so much, but for internship,residency or Nat Guard etc.. yep "
Kenneth Crute  :  "yes MH, depending on the reason for the forbearance though"
Matt Hodges  :  "FHA Q - will fha allow forebearance of 12 months instead of deferment of 12 months on student loans?"
John Tassios  :  "getting back to consumption report, economists talking heads still underestimating amount of damage done to average consumers with the 2008 crisis. deleveraging is still ongoing and with wage growth at 0, consumers using gas savings to pay bills or save, not spend as economists were predicting. I hope FED understands this too before they make big mistake of raising rates this year. "
Victor Burek  :  "so gas savings not flowing into economy"
Matthew Graham  :  "RTRS - US DEC YEAR-OVER YEAR PCE PRICE INDEX +0.7 PCT VS NOV +1.2 PCT (PREV +1.2 PCT); CORE +1.3 PCT VS NOV +1.4 PCT (PREV +1.4 PCT)"
Matthew Graham  :  "RTRS- US DEC PERSONAL INCOME +0.3 PCT (CONS +0.2 PCT) VS NOV +0.3 PCT (PREV +0.4 PCT)"
Matthew Graham  :  "RTRS- US DEC PERSONAL SPENDING -0.3 PCT (CONSENSUS -0.2 PCT) VS NOV +0.5 PCT (PREV +0.6 PCT)"