MBS RECAP: A slow start to a possibly slow week.
Bonds held up well today, leaving at least half of last week’s gains intact. In the last two days of trading, government bonds shy away from a more aggressive trend towards lower yields and instead continue to advocate sideways consolidation. Things can always change, of course, but there is limited inspiration on the calendar in the coming days as the ECB’s announcement on Thursday is the first thing that really pops out. Stocks may be interested in a corporate earnings calendar that keeps rising, but the correlation between stocks and bonds has been a hit and miss for months.
Econ data / events
Fed MBS purchase 10 a.m., 11:30 a.m., 1 p.m.
Housing starts 1,739m vs 1,613m f’cast
Building permits 1.766m vs 1.75m f’cast
Market Movement Review
Bonds started a little stronger in Asia but lost ground a few hours after the European session started. 10 year returns are now “unchanged” on the day at 1.59%. 2.5 UMBS also remain unchanged at 103-13 (103.41).
A bit of weakness sooner, followed by an upswing to unchanged levels. The yields for 10 years are now rising again slightly and are currently increasing by 1.3 basis points to 1.603. UMBS 2.5 coupons remain unchanged at 103-12 (103.375).
Government bonds remain slightly weaker but managed to maintain a flat trajectory at 1 p.m. after a little weakness. 10 year yields are up less than 1 basis point at 1.599%. 2.5 UMBS are up 1 tick (0.03) at 103-13 (103.41).
Discuss the MBS and mortgage markets on our streaming dashboard