MBS RECAP: Foreign Central Banks and Data Causing Problems

By: Matthew Graham

Bond markets weakened overnight as Yen/USD surged higher (meaning Yen is weakening versus the dollar).  This has to do with the potential for new stimulus at the end of the month whereby Japan is rumored to be considering giving money directly to its citizens (instead of buying bonds).  Today isn't the first time this moved markets, but a few more headlines were out overnight, so a bit more movement took place.

Meanwhile, another major central bank was set to make news a few hours later.  Not everyone expected the Bank of England to cut rates at today's meeting, but evidently more than a few traders were surprised by the fact that they abstained.  Rates moved swiftly higher after that and entered the domestic session with 10yr yields up to 1.52 from yesterday's close of 1.475.

The morning's economic data put just a bit more negative spin on the ball, with Producer Prices jumping up 0.1 percent over last month to a core, annual level of 1.3 percent--well over the median forecast of 1.0 percent.  Bonds weakened further in choppy trading but a clear trend emerged as the day wore on: 10yr yields wanted to hover near the 1.53% pivot point ahead of tomorrow's session, which has the biggest economic data of the week (Retail Sales and Consumer Prices).  


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
103-20 : -0-06
Treasuries
10 YR
1.5370 : +0.0700
Pricing as of 7/14/16 5:19PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:12AM  :  ALERT ISSUED: 1.53 Ceiling Breaking Down
8:39AM  :  Bonds at Weakest Levels After Strong PPI

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Eric Weishaar  :  "Schrodinger's Cat? Economic Style."
Dan Shapiro  :  "Same old FED...trying to talk the rates higher... they have zero credibility IMO"
Matthew Graham  :  "everything is true, depending on whom you ask"
Joseph Daquino  :  "That's funny. Last week we were already in a recession and now everything is back to normal. Can't make this stuff up."
Matthew Graham  :  "RTRS - LOCKHART SAYS CONCEIVABLE FED WILL MOVE "IN THE NEAR TERM""
Matthew Graham  :  "RTRS - FED'S LOCKHART SAYS DOES NOT RULE OUT TWO RATES HIKES FOR THE REST OF THIS YEAR, DEPENDING ON FLOW OF ECONOMIC DATA"
Matthew Graham  :  "RTRS - LOCKHART SAYS DOES NOT SEE RECESSION ON THE HORIZON"