MBS Live: MBS Morning Market Summary
MBS and Treasuries' cups runneth over... Or perhaps their cups are leaking a bit after the headier moments of this morning's post-NFP rally. Before continuing, we'd invoke Freddie Mercury and say 'nothing really matters' at this point in the day. We're into the afternoon hours on a Friday and volume is excruciatingly low compared to the massive morning activity. The show is over. The audience cheered. And there's little reason to stay in the stands. That said, MBS are slightly weaker from AM levels with Fannie 3.0s now down to 103-26, our first supportive pivot point coming off the rally. In the context of the massive move this morning, the losses don't look like much, but it's worth remembering that we're 9 ticks off the highs. As far as benchmarking the bigger picture, 10yr yields seem to have tested their 1.61 technical level this morning and decided to hold off on a more aggressive move ahead of next week's 2nd round of big-ticket events. Bottom lines: not much happening any more today, but general leakage taking prices slowly lower. Any lower than 103-26 in Fannie 3.0s and reprice risk increases.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
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Morning Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this morning.
10:33AM :
Bond Markets Add Slightly To Earlier Gains, Possible Resistance Now
After the initial pop into better territory that followed this morning's NFP bomb, MBS and Treasuries managed to extend gains a bit further. The day's best levels were seen right at the 9:30am stock market open with 10's dipping into the 1.5's and Fannie 3.0 MBS cracking 104. Both have since eased to 1.613 and 103-29 respectively.
This clearly sets up resistance for the rest of the day, though we're not sure how much we'd read into any other moves given the quickly waning volume and major events still to come next week.
Essentially, and "so far," this has been a "logical facemelter" taking us right back to strong levels on Wednesday afternoon in Treasuries and a bit stronger in MBS (though they'll be rolling next week so the actual levels are more relative for MBS).
If things happen to slide this afternoon, first major defensive pivot at 103-26 with 103-20 being more surefire cause for negative reprice expectations. Upside feels limited unless we can break previous highs on the day at 104-03, which doesn't feel extremely likely as the rally looks to have generally run its course for the day. Anything's possible in late day, light liquidity though.
This clearly sets up resistance for the rest of the day, though we're not sure how much we'd read into any other moves given the quickly waning volume and major events still to come next week.
Essentially, and "so far," this has been a "logical facemelter" taking us right back to strong levels on Wednesday afternoon in Treasuries and a bit stronger in MBS (though they'll be rolling next week so the actual levels are more relative for MBS).
If things happen to slide this afternoon, first major defensive pivot at 103-26 with 103-20 being more surefire cause for negative reprice expectations. Upside feels limited unless we can break previous highs on the day at 104-03, which doesn't feel extremely likely as the rally looks to have generally run its course for the day. Anything's possible in late day, light liquidity though.
8:41AM :
ALERT ISSUED:
ECON: NFP MISSES BIG. BOND MARKETS REVERSE EARLIER WEAKNESS
- NFP +96k vs +125k Consensus.
- July revised to 141k vs 163k previous
- Jobless rate 8.1 pct, feel free to ignore
- Labor force participation 63.5, lowest since 1981
- Initial reactions: 10yr Treasuries have shot down over 10 ticks and look ready to test the low 1.6's pivot zone. Fannie 3.0 MBS are up more than half a point on the day to 103-25, which is nearly a point higher than the morning lows.
Total nonfarm payroll employment rose by 96,000 in August, and the unemployment rate edged down to 8.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, in professional and technical services, and in health care.
Household Survey Data
The unemployment rate edged down in August to 8.1 percent. Since the beginning of this year, the rate has held in a narrow range of 8.1 to 8.3 percent. The number of unemployed persons, at 12.5 million, was little changed in August.
Since the beginning of this year, employment growth has averaged 139,000 per month, compared with an average monthly gain of 153,000 in 2011. In August, employment rose in food services and drinking places, in professional and technical services, and in health care.
- July revised to 141k vs 163k previous
- Jobless rate 8.1 pct, feel free to ignore
- Labor force participation 63.5, lowest since 1981
- Initial reactions: 10yr Treasuries have shot down over 10 ticks and look ready to test the low 1.6's pivot zone. Fannie 3.0 MBS are up more than half a point on the day to 103-25, which is nearly a point higher than the morning lows.
Total nonfarm payroll employment rose by 96,000 in August, and the unemployment rate edged down to 8.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, in professional and technical services, and in health care.
Household Survey Data
The unemployment rate edged down in August to 8.1 percent. Since the beginning of this year, the rate has held in a narrow range of 8.1 to 8.3 percent. The number of unemployed persons, at 12.5 million, was little changed in August.
Since the beginning of this year, employment growth has averaged 139,000 per month, compared with an average monthly gain of 153,000 in 2011. In August, employment rose in food services and drinking places, in professional and technical services, and in health care.
Live Chat Featured Comments
A recap of the featured comments from the MBS Live Dashboard's Live Chat feature, utilized by hundreds of industry professionals each day.
Victor Burek : "my response was, he got too much sun on his vacation"
Andy Pada : "I think he did"
Victor Burek : "didnt someone say Sentelli said it was going to 1.8?"
Adam Quinones : "hahahah one trader shared this link in response to NFP data: http://i.imgur.com/XaiUx.gif"
Jesse Harwick : "10 yr tsy looks like Wile E Coyote"
Christopher Stevens : "I still think best ex will have a hard time dipping below 3.5% especially with g-fee increase being priced in."
Matthew Graham : "stocks look like they're figuring out the QE3 implications finally"
Thomas Quann : "I have the song" ROCKETMAN" playing now as i stare at the chart"
Matthew Graham : "
Read The Full Alert "
MBS Live Alert Issued 8:41 AM
ECON: NFP MISSES BIG. BOND MARKETS REVERSE EARLIER WEAKNESSRead The Full Alert "
Victor Burek : "at the rate people falling out of workforce..7.9 is very possible"
Andrew Russell : "7.9% UE rate in 2 months. What a joke"
Victor Burek : "prior 2 months revised lower"
Matthew Graham : "RTRS - U.S. AUG AVERAGE WORKWK ALL PRIVATE WORKERS 34.4 HRS (CONS 34.5 PCT) VS JULY 34.4 HRS (PREV 34.5), FACTORY 40.5 VS 40.7, OVERTIME 3.2 VS 3.2 "
Brett Boyke : "If Gross is right MBS gonna be part if easing "
Matthew Graham : "RTRS- U.S. LABOR FORCE PARTICIPATION RATE 63.5 PCT IN AUG, LOWEST SINCE SEPT 1981, VS 63.7 PCT IN JULY "
Victor Burek : "workforce shrunk by 368k"
Victor Burek : "yep..qe3 is coming fo sho"
Andrew Russell : "Yup "
Scott Valins : "QE3"
Oliver S. Orlicki : "last month revised to 141"
Christopher Stevens : "not surprised. maybe that is why Obama was not all about jobs like clinton was in his speech"
Matthew Graham : "RTRS- U.S. AUG JOBLESS RATE 8.1 PCT (CONSENSUS 8.3 PCT) VS JULY 8.3 PCT (PREV 8.3 PCT)"
Matthew Graham : "RTRS - U.S. AUG GOVERNMENT JOBS -7,000 VS JULY -21,000 (PREV -9,000) "
Matthew Graham : "Grats floaters"
Matthew Graham : "RTRS- US AUG PRIVATE SECTOR JOBS +103,000 (CONS +138,000), JULY +162,000 (PREV +172,000) "
Adam Dahill : "Wow 96k"
Matthew Graham : "RTRS - U.S. AUG NONFARM PAYROLLS +96,000 (CONSENSUS +125,000) VS JULY +141,000 (PREV +163,000), JUNE +45,000 (PREV +64,000) "
Paul L. Martin : "95"
Michael Kelleher : ""94k" is my guess, what a big report "
Brayden Alexander : "118k"
Michael Owens : "75K"
Jeff Anderson : "Gm, all. 130-170k still."
Oliver S. Orlicki : "whats the guess on nfp"
Matt Hodges : "If i simply look at those two comments, I say WH seeing NFP is playing down numbers at 8:30"
Matt Hodges : ""The path we offer may be harder, but it leads to a better place. And I’m asking you to choose that future. I’m asking you to rally around a set of goals for your country, goals in manufacturing, energy, education, national security, and the deficit; real, achievable plans that will lead to new jobs, more opportunity, and rebuild this economy on a stronger foundation.""
Matt Hodges : "two lines: "I won’t pretend the path I’m offering is quick or easy.""
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