Which Way Do We Go?

Markets continue trying to sort out the prospects for a recovery vs the risk of covid-19 resurgence.  This is resulting in strong correlation between stocks and bonds.  Both have leveled off so far this week as they wait for more info.  Both are looking at each other wondering "which way do we go?"  We'll know it when we see it and we're not seeing it today.

Econ Data / Events

  • 11:30-11:50 AM (ET) - Fed 30yr UMBS Buying  

  • Housing Starts: 974k vs 1.095m f'cast, .934k prev (up 4.3%)

  • Building Permits: 1.22m vs 1.228m f'cast, 1.066m prev (up 14.4%)

Market Movement Recap
07:57 AM

Bonds were inconsequentially weaker overnight as stocks gained half a percent in futures.  MBS took their lumps yesterday on heavy supply and look to start today just a hair stronger.

11:35 AM

bonds rallied modestly into 10:30am with stocks falling at the same time.  Both have bounced since then. Treasuries and MBS are both near unchanged levels.

01:06 PM

Powell is talking with Congress again, but markets don't seem to care.  Bonds are flat.  MBS are off the lows (1 tick better now vs 1 tick worse a short while ago).

03:57 PM

Treasury yields edged down to the lows of the day in concert with stock losses.  Nothing major to pin the move on as both sides of the market are trading sideways in the bigger picture.  MBS underperforming, hanging out near the lows (heavy supply from new origination putting pressure on prices).