MBS Underperforming Treasuries, But Broader Trends Are Decent

The mortgage market continues coping with the combination of last week's LLPA news and a generally high level of supply.  One hurts bond prices relative to Treasuries.  The other hurts mortgage rates relative to bonds.  

Econ Data / Events

  • 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)

  • Jobless Claims 1.106m vs 925k f'cast, 963k prev

  • Philly Fed Index 17.2 vs 21.0 f'cast, 24.1 prev

Market Movement Recap
08:11 AM

Bonds improved nicely overnight with Treasury yields pulled lower by an ongoing rally in European yields.  The 10yr is 4bps lower at .644 and 2.0 UMBS are opening up by more than an eighth of a point.

10:38 AM

Treasuries holding gains.  MBS underperforming significantly with 2.0 coupons down roughly an eighth of a point from AM highs.  

04:10 PM

MBS underperforming after Fed buying operation (lots of supply offered from sellers).  This brought MBS back to unchanged levels even as Treasuries remain in moderately stronger territory.  Other potential issues discussed in today's huddle video.