A lot has happened in the last 3 months – especially in terms of variables that could affect future Fed policy. This made any massive response to today’s Fed protocol too slow, but it’s always good to be prepared for some volatility when it comes to the Fed. Traders prepared to sell bonds before the 2pm release. When the logs proved to be as docile as they could have been, there was a quick switch back to yesterday afternoon’s trading range and that was it.
Fed MBS purchases 10 a.m., 11:30 a.m., 1 p.m.
Housing starts 1,534m vs. 1,600m f’cast, 1,643m prev
Building permits 1,635m vs. 1,610m f’cast, 1,594m prev
Slightly weaker overnight as Asian stocks rallied. EU meeting was more supportive. 10yr started and stays about 1bp higher (1,277). UMBS 2.0 less than an eighth.
Bonds are losing ground on the way into the Fed minutes. MBS just over an eighth point weaker from intraday highs. 10-year gain of 2.6 basis points at 1.293%. Slow, steady, linear grind all morning with a little extra defense in the last 30 minutes.
Two-way street to Fed Minutes, but it appears to be dissolving with moderate gains. This brings 10 year yields back to 1bp from “unchanged” and MBS prices rose 5bps (2 ticks) that day.
Stick a fork in today’s session. It is finished. Levels may drift a little higher or lower (currently unchanged from the previous update) but the real finding is that the Fed minutes were irrelevant.
MBS pricing overview
The price shown below is delayed, please refer to the timestamp below. Real-time prices is available through MBS Live.
101-11: + 0-03
|Prices from 08/18/21 4:32 p.m.|
Today’s reprice notifications and updates
2:35 pm : Ultra Condensed Fed Minutes Bullet Points
2:07 pm : No whammies in the Fed minutes, judging by the Fed minutes’ response
13:26 : WARNING ISSUED: At the weakest levels; Increased risk with new prices
9.00 : A little weaker overnight. No response to data