MBS MID-DAY: Global Markets Shed Risk, Bonds Rally, But Giving Back Some Gains

By: Matthew Graham •

Whether it's Greece, China, commodities, wages, stock market corrections, or the Fed's rate hike outlook, global markets are moving away from risk so far in July.  That means stocks are falling and bonds are improving (i.e. moving lower in yield).  Unlike some of the past few corrections, this one has helped both German and US 10yr yields move back across important levels that had acted as a floor in June.

With respect to the break below 2.29% in 10yr yields (or .72% in German 10yr yields), we can only watch and wait.  Considering the strength of the move toward higher rates seen so far in 2015, it will take more than today to turn the tide.  That said, days like today are a necessary first step if the tide is indeed going to turn. 

As of this afternoon, bond markets are giving back some of the morning gains.  Yet again, 11am proved to be the turning point in the day, reinforcing the sense that European trading is the dominant consideration earlier in the day (many European markets close at 11am ET).

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
100-03 : +0-11
FNMA 3.5
103-14 : +0-08
FNMA 4.0
106-06 : +0-06
Treasuries
2 YR
0.5770 : -0.0160
10 YR
2.2280 : -0.0620
30 YR
3.0190 : -0.0680
Pricing as of 7/7/15 1:14PMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:27AM  :  German/US Bonds Trying for First Real Break of Important Inflection point
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "Here's a Hang Seng chart, so you can see what I mean. I'm sure there are other ways to look at what's going on, but this one seems 'not so bad.' View Image"
Jeff Anderson  :  "Not a big expert on China but a 28% correction from the high a month or so ago definitely caught my eye."
Andrew Horowitz  :  "and China has lots of cash in the coffers "
Matthew Graham  :  "could this just be the beginning? sure. But until then..."
Matthew Graham  :  "I wouldn't make too much of China just yet. It's completely different so far. Most of the losses are merely a return to the trend. In fact, Hang Seng has yet to break it's 5yr uptrend."
Jason Harris  :  "I feel like China is us circa 2007 "
Rob DiGiore  :  "We knew about Greece but how did we not see this China situation coming?"
Christopher Stevens  :  "The Greek crisis is simply noise when you think about what effects a stock bubble in China would do seeing as they have worlds second largest GDP. Greece is more of a political situation where China is an economic one."
Christopher Stevens  :  "I remember reading something a while back that talked about Chinese citizens quitting their jobs and day trading the stock market. They were also borrowing money to invest in the stock market. So part of the rise in the stock market was not based on any fundamentals but on exuberance of everyday citizens to get in on the rising market. "
Hugh W. Page  :  "I think we'll be at .75. One hike before year end and 1 more by July 2016"
Victor Burek  :  "0-.25"
Hugh W. Page  :  "So, by this same time next year where does everyone think Fed Funds be?"
Michael Baker  :  "MG: Thank you...as a Risk/QC Compliance Manager I am not on the frontlines like many here, but this board really helps our companies clients as the discussions are talked about throughout the company. "