What Does Today's Rally Mean For The Bigger Picture?

What Does Today's Rally Mean For The Bigger Picture?

Bonds began the day in flat to slightly weaker territory, but that didn't last long.  A gigantic wave of selling in equities markets grew to tsunami-like proportions as the day progressed.  Unlike many other examples of days where stocks fall 3-4% by noon, there was no major attempt to recover before the 4pm NYSE close.  It was very clear throughout the day that the progressively larger selling spree in stocks was responsible for the progressively larger rally in bonds.  With oil prices following the same path, "global growth concern" was the topic of the day.  With all this being the case, today's bond rally, in and of itself, means very little for the bigger picture because its existence is predicated on ongoing stock losses.  

Market Movement Recap
08:47 AM

Initially weaker overnight.  Big rally in Europe.  Stocks sliding again (not as much as y'day so far). Bonds liking the weak Philly Fed data.  10yr down over 9 bps at 2.79.  MBS up 3/8ths of a point.

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What Does Today's Rally Mean For The Bigger Picture?

MBS & Treasury Markets
UMBS 4.0 99.73 +0.39 10YR 2.778% -0.106% 5/19/2022 8:52AM EST
Jobless Claims 218k vs 200k f'cast, 197k prev Philly Fed Survey 2.6 vs 16.0 f'cast, 17.6 prev Philly Fed 6-mo outlook 2.5 vs 8.2 prev, lowest since 2008 Bonds were initially weaker overnight, but rallied significantly in Europe in concert with steep declines in equities, oil prices, and EU bond yields.  This morning's 830am data has actually proven to be a market mover, which isn't always something we'd assume from Philly Fed.  But the notion of a 6-m...   READ MORE
Today's Mortgage Rates
30YR Fixed 5.44% -0.01% 15YR Fixed 4.85% +0.01% 5/18/2022
There has been a lot of volatility in the bond market recently.  Because bonds drive interest rate changes, that's meant plenty of volatility in the mortgage market as well.  The month of May has been less universally awful compared to March and April, one of the worse 2-month stretches in the modern history of rates.  But in transitioning from "awful" to "something else," mortgage lenders are scrambling to set rates at the right levels. Yesterday saw the bon...   READ MORE
Economic Calendar
Time Event Period Actual Forecast Prior
Thursday, May 19
8:30AM May Philly Fed Business Index May 2.6 16.0 17.6
8:30AM w/e Jobless claims 4-wk avg (k) w/e 199.50 192.75
8:30AM w/e Continued Claims (ml) w/e 1.317 1.320 1.343
8:30AM w/e Jobless Claims (k) w/e 218 200 203
10:00AM Apr Existing home sales (ml) Apr 5.65 5.77
10:00AM Apr Exist. home sales % chg (%) Apr -2.7
10:00AM Apr Leading index chg mm (%) Apr 0.0 0.3
10:30AM w/e Nat gas-EIA, change bcf w/e 87 76
1:00PM 10-yr TIPS Auction (bl) 14
Friday, May 20
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Mortgage rates have moved higher at the fastest pace in decades so far in 2022, but this week proved to be a refreshing exception.  To understand why, we first need to examine the relationship between stocks and bonds, which is a bit more variable than most people assume.  Conventional wisdom holds that stock prices and bond yields correlate with each other.  This makes good logi... READ MORE