CONTACT ME
Sideways in Much Stronger Territory

The domestic session has been eerily calm/sideways after opening in much stronger territory.  Over the weekend, Trump tweeted that he plans to increase tariffs from 10% to 25% on $200bln of Chinese imports.  This is on top of a 25% levy on a separate $325bln. That may not be the most relevant reason for the big drop in stocks and bond yields, however.  

Giving the news sharper teeth was  a separate report from the WSJ that this week's trade talks have been cancelled--a striking development not only in light of the additional tariffs implied by the Trump tweet, but because last week's chatter suggested a trade deal as early as this week.

Markets can't be sure if they're witnessing a negotiation strategy or a material breakdown in trade deal progress, so they have to price in some of both.  In other words, if this was a confirmed breakdown, yields and stocks would likely be much lower.  And it was an obvious negotiation tactic, we might not be doing quite as well.

Stocks have recovered nearly half of their over-the-weekend drop, but bond yields haven't been eager to follow.  10yr yields have been holding exceptionally flat just under 5bps lower on the day (2.484% currently).  Fannie 3.5 MBS are up 6 ticks (0.19) at 101-05 (101.16).   

MBS / Treasury Market Data

UMBS 5.5
99.66
+0.14
UMBS 6.0
101.02
+0.06
2 YR
4.6272
+0.0592
10 YR
4.2230
+0.0350
Pricing as of: 3/28 5:51AM EST
This Mortgage Market Update is provided in partnership with MBS Live and provided exclusively to MBS Live Subcribers.