MBS Live Day Ahead: Fed in Rearview, Bonds Wait on Stimulus

The combination of a friendly press conference with Fed Chair Powell and an unfriendly absence of change to the bond buying policy left the bond market with fairly neutral momentum intact heading into the end of the year.  The only obvious hurdle to clear is that of fiscal stimulus (or a combo stimulus/spending bill) which could become a reality any time in the next few days.  Bonds still probably have some moves to make depending on the outcome (sooner/bigger = higher yields).

There's also apparently some motivation to be found in the econ data with today's early trading providing a fresh example.  Bonds had been trending toward slightly weaker levels since the 8:20am CME open and abruptly reversed course at 8:30am. That's a perfectly rational move given the extent of Jobless Claims weakness over the past 2 weeks. Philly Fed is an even more reliable market mover and it's in rough shape with the "new orders" component down to 2.3 from 37.9 last month.

Housing Starts bucked the data trend, but no one cares about housing starts as a bond market mover these days.

10yr yields turned positive after being roughly 1bp higher, now 2bps lower at .90.

1.5 UMBS are up an eighth of a point at 100-27 (100.84).

There are no other economic reports on tap.  Now it's a waiting game for stimulus headlines or perhaps some other headline surprise that has yet to make itself known.