Rate Rally Returns With Help From Housing Data

How about a good, old-fashioned market reaction to weaker economic data?  We’ve seen it a few times recently, but not in response to an “almost never” market mover like New Home Sales.  Today was an exception owing to the 591k headline vs a 750k forecast.  Bonds were already edging into stronger territory overnight on weak PMI data in Europe.  Domestic data took it to the next level with stocks and bond yields moving lower in unison.  Even after stocks attempted to recover, bonds retained most of their gains–especially in the short end of the yield curve given the slowing seen in the pace of Fed rate hikes (eventually).

Econ Data / Events

Fed MBS Buying  10am, 11:30am, 1pm

New Home Sales 591k vs 750k f’cast, 709k prev Markit Services PMI 53.5 vs 55.2 f’cast Markit Manufacturing PMI 57.5 vs 57.5 f’cast

Market Movement Recap

08:37 AM Flat to slightly stronger in Asia.  Better gains in Europe on generally weaker data and ECB clarification.  10yr down 4bps and MBS up just under an eighth.

10:28 AM Bigger gains after 930am NYSE open.  Stocks tanked.  Bonds surged.  10yr down almost 13bps to 2.733 and MBS are up more than half a point.

02:14 PM Fairly flat since the last update, despite a decent bounce in stocks.  Treasuries underperforming a bit with 10yr now down only 10.6bps at 2.754.  MBS haven’t lost much ground with 4.0s still up just over half a point, but nonetheless down from the highest highs by almost an eighth.

04:12 PM Noticeable but mild trend up from the low yields of the day during the PM hours.  MBS haven’t fallen more than an eighth from the highs and are still up half a point.  10yr yields are still down 10bps.
Source: Mortgage News Daily