Brexit-related headlines helped the bond market recover as the new week began, but even after European markets closed, gradual strength remained for Treasuries. Ramping covid case counts, and government shutdown uncertainty could be contributing as well, but the threat of an omnibus spending bill (which prevents the shutdown and delivers a nominal amount of covid relief) should be considered a serious threat if it happens before next week's Fed announcement. At least it would be a threat to Treasuries. Mortgage rates, on the other hand, have been exceedingly insulated from Treasury volatility.
-
20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)
Overnight session started modestly stronger for bonds, mostly by way of a correction to Friday's heavy selling. Brexit uncertainty fueled a strong move in European bonds and Treasuries came along for the ride to some extent. US 10yr down more than 3bps to start and UMBS 2.0 coupons are up .19bps (6 ticks).
MBS underperforming and 1.5 coupons are highly illiquid at the moment (huge swings in bid prices that aren't necessarily indicative of reality). That's finally been sorted out by traders (hopefully) without too much damage to outright trading levels. Both 1.5 and 2.0 coupons are up just over an eighth of a point while 10yr yields are down 4bps at .933.
MBS have bounced back decently after illiquidity gave the appearance of massive volatility mid-day. In actuality, it was just an eighth of a point of weakness from the highs, and we've regained at least half of it now. Treasury yields have been trending gently lower all day regardless of AM strength in stocks.
MBS Market Alerts
