Mystery Rally Gets Bonds Back in The Green

Mystery Rally Gets Bonds Back in The Green

Both Tuesday and Wednesday are effectively free from market-moving economic data,  Moreover, nothing this week has to offer can come close to next week's CPI/Fed combo.  That leaves bonds to drift without much conviction until next Tuesday and today fit the bill.  The most notable run of the day happened at 2pm when Treasury yields dropped fairly sharply.  The caveat is that the drop took place well within yesterday's trading range, and yesterday's range was well within Friday's trading range.  As such, we hesitate to read much into the afternoon rally, but remain bemused by the absence of obvious motivation.  More on this bemusement in today's video...

Market Movement Recap
08:43 AM

Treasuries initially weaker amid risk-on trade in Asia. Rallied back with Europe.  10yr down 3.7bps at 3.546.  MBS are anywhere from unchanged to an eighth of a point stronger depending on liquidity

01:41 PM

10yr sideways and narrower, currently down 2.2bps on the day at 3.561.  MBS down roughly an eighth and also generally sideways.

02:42 PM

MBS moving into positive territory now, currently up an eighth of a point.  10yr down 6.8bps at 3.513.  Heavy selling in stocks contributing.  

04:09 PM

Mostly holding the afternoon's mystery gains.  MBS up an eighth on the day.  10yr down 5.5 bps at 3.528.

Latest Video Analysis

Mystery Rally Gets Bonds Back Into The Green.mp4

MBS & Treasury Markets
UMBS 5.0 99.66 +0.14 10YR 3.579% -0.004% 12/6/2022 5:03PM EST
After spending most of the day treading water at slightly weaker levels, MBS are back in the green to the tune of roughly one eighth of a point.   2pm served as a jumping-off point for a small but noticeable rally in Treasuries.  10yr yields dropped from 3.56 to 3.513 during that time (7bps lower on the day). Compelling justifications are hard to come by.  There's some talk of equities losses, but while there is correlation with bonds, the magnitude ...   READ MORE
Today's Mortgage Rates
30YR Fixed 6.37% +0.04% 15YR Fixed 5.80% +0.02% 12/6/2022
This week continues to be a placeholder ahead of more consequential events coming up in the week ahead.  Specifically, next Tuesday and Wednesday's combination of the Consumer Price Index and the Fed announcement will unequivocally set the tone for rates heading into the end of the year and possibly beyond. Between now and then, there's not much to be done when it comes to big changes in rates.  Today was another great example as the bonds that underlie the mortga...   READ MORE
Economic Calendar
Time Event Period Actual Forecast Prior
Tuesday, Dec 06
8:30AM Oct Trade Gap (bl) Oct -78.16 -80.0 -73.3
8:55AM w/e Redbook yy (%) w/e 5.7 10.4
Wednesday, Dec 07
7:00AM w/e Mortgage Market Index w/e 208.1
7:00AM w/e MBA Purchase Index w/e 181.0
7:00AM w/e MBA Refi Index w/e 325.5
7:00AM w/e MBA 30-yr mortgage rate (%) w/e 6.49
8:30AM Q3 Productivity Revised (%) Q3 0.6 0.3
8:30AM Q3 Labor Costs Revised (%) Q3 3.1 3.5
10:30AM w/e Crude Oil Inventory (ml) w/e -3.305 -12.580
10:30AM w/e Gasoline Inventory (ml) w/e 2.707 2.769
10:30AM w/e Petroleum Distillate Inventory (ml) w/e 2.208 3.547
3:00PM Oct Consumer credit (bl) Oct 28.30 24.98
Read My Latest Newsletter
As far as financial markets are concerned, a green Christmas is better than anything Bing Crosby could have crooned about. Green is the color that flashes when markets are improving or when interest rates are falling. Green, for lack of a better word, is good. For mortgage rates, it's been an especially difficult year.  They've risen at the fastest pace in 40 years to levels not seen for 2... READ MORE