MBS MID-DAY: With European Bonds Holding, US Bonds Free to Rally on Data

By: Matthew Graham

First off, it's important to note that everything is still playing out inside a narrow range overall.  We're about to discuss improvements in bond markets, but they haven't even gotten us back to positive territory on the day, let alone though yesterday's strongest levels.  Still, being close to unchanged on the day feels like a victory compared to what we might have expected given the morning's news.

Particularly, Greece's bailout process is moving right along.  Finland--one of the two countries that had expressed the most opposition to the bailout--voted to approve it this morning.  They also voted to approve Greece's much-needed bridge financing (because the actual bailout is still a ways off).  The latter is already a done deal as of this morning, giving Greece €7 bln to meet its important near-term obligations (especially July 20th ECB payment). 

With the bridge financing in place, the ECB was sanguine this morning with respect to reopening Greece's emergency liquidity assistance.  They're proceeding under the assumption that Greece is and will continue to be a member of the Eurozone, and they will help however they can. 

We could well have expected more weakness on such developments, but we're just not seeing it.  German bund markets are in weaker territory, to be sure, but it's very contained.  With that being the case, US markets have been more free to react to this morning's economic data.  The biggest input in that regard has been the much weaker than expected Philly Fed data.  Bonds rallied noticeably after that, with MBS and Treasuries both getting very close to unchanged territory on a day where--by all rights--we can be thankful not to be losing more ground. 

Bottom line: no big picture trends have been decided, and we generally continue to hold sideways inside June/July's range.  It's becoming less and less clear what it will take to break higher or lower.


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
99-13 : -0-01
FNMA 3.5
102-27 : -0-01
FNMA 4.0
105-25 : +0-00
Treasuries
2 YR
0.6610 : +0.0280
10 YR
2.3650 : +0.0090
30 YR
3.1340 : -0.0080
Pricing as of 7/16/15 10:31AMEST

Morning Reprice Alerts and Updates
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9:33AM  :  Holding Modestly Weaker Levels in Spite of Challenges

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Brent Borcherding  :  "And here we go..."
Matthew Graham  :  "RTRS- PHILADELPHIA FED BUSINESS CONDITIONS JULY 5.7 (CONSENSUS 12.0) VS JUNE 15.2"
Matthew Graham  :  "RTRS- U.S. JULY NAHB HOUSING MARKET INDEX 60 (CONSENSUS 60) VERSUS REVISED 60 IN JUNE"
Matthew Graham  :  "RTRS- GERMAN CONSERVATIVE BUDGET EXPERT REHBERG SAYS SCHAEUBLE TOLD BUDGET COMMITTEE THAT FIRST PART OF BRIDGE FINANCING FOR GREECE OF 7 BLN EUROS AVAILABLE VIA EFSM IN JULY"
Victor Burek  :  "they fear grexit more"
Manny Gomes  :  "I think the Euro zone is crazy for giving Greece a third bailout. I mean if they can't pay their bills now how will they be able to do it when the economy further suffers with more Austerity. Not to mention half of the citizens are against this bailout and will more than likely find new inventive ways to not pay taxes. "
Matthew Graham  :  "RTRS- ECB'S DRAGHI SAYS ECB CONTINUES TO ACT ON ASSUMPTION THAT GREECE IS AND WILL REMAIN MEMBER OF EURO AREA"
Matthew Graham  :  "RTRS - EUROGROUP GRANTS IN PRINCIPLE 3-YEAR ESM BAILOUT LOAN FOR GREECE -STATEMENT"
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS FALL TO 281,000 JULY 11 WEEK (CONSENSUS 285,000) FROM 296,000 PRIOR WEEK (PREVIOUS 297,000)"