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10yr Yields Holding Under 3.00%

Bonds sold off only for a few minutes following the 10am ISM data but quickly reversed course and made modest gains into the noon hour.  Most of this positive/resilient momentum is a factor of "new month" tradeflows, but Fed speakers and technicals/momentum have helped.

Most recently, it was the Fed's Kaplan with the following:

  • FED'S KAPLAN SAYS HE IS FOCUSED ON NOT BEING PRE-DETERMINED ABOUT THE FUTURE PATH OF RATES
  • KAPLAN SAYS HE IS PAYING ATTENTION TO SLOWDOWN IN GLOBAL GROWTH, AND EXPECTS U.S. GROWTH TO SLOW NEXT YEAR
  • FED'S KAPLAN SAYS 'WE ARE IN A MORE CHALLENGING PERIOD' IN OUR EFFORTS TO NORMALIZE MONETARY POLICY

Any time we have a Fed member calling attention to a "slowdown in global growth" and moreover to an anticipated slowdown in the US, it tends to be good for rates.  His mention of a "more challenging period" reflects the approach of a shift in Fed policy--also good for rates in the current environment where Fed policy has been to steadily hike rates.

10yr yields are back down into positive territory at 2.99%.  With that level in mind, we can also assume some technical buying is in play.  There are several pivot points around 3.0% (starting all the way up at 3.03%) that have resulted in stronger bond buying.  Fannie 4.0 MBS are also back in positive territory, now up 1/32nd at 100-22 (100.69).

MBS / Treasury Market Data

UMBS 5.5
99.48
-0.17
UMBS 6.0
100.94
-0.08
2 YR
4.6221
+0.0541
10 YR
4.2008
+0.0128
Pricing as of: 3/28 2:15PM EST
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