As feared/anticipated, today was all about the “dots” (the dot plot that shows Fed members’ views of the Fed Funds Rate over time). Even though Powell reminded markets, yet again, to take the dots with a big grain of salt, the sell-off was swift and severe for bonds. Powell’s press conference did little to push back against the weakness and bonds moved right back to their worst levels of the day after Powell was done. There’s just no other way for the Fed to say they’re getting closer to tapering, and no other way for the market to react.
Econ Data / Events
Fed MBS Buying 10am, 1130am, 1pm
Housing Starts 1.572m vs 1.630m f’cast
Building Permits 1.681 vs 1.73m f’cast
Import prices 1.1 vs 0.8 f’cast
Export prices 2.2 vs 0.8 f’cast
Market Movement Recap
Barely weaker in Asia. Barely stronger in Europe. Unchanged after early US econ data. Trading levels perfectly flat with 10s at 1.487 and 2.0 UMBS at 100-30 (100.94).
Bonds blasted by Fed announcement. Specifically, the dots. Read more HERE.
The weakness leveled off during Powell’s press conference, but we never got an impressive recovery. Trading levels have been heading back to their worst levels since Powell finished. 10yr yields are up 8bps at 1.57% and 2.5 UMBS are down half a point.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
102-27 : -0-17
1.5740 : +0.0750
|Pricing as of 6/16/21 4:18PMEST|
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matt Hodges : “this is the end, my friends… just like all of the other times.”
Matt Graham : “POWELL SAYS THIS WAS THE TALKING ABOUT TALKING ABOUT MEETING”
Matt Graham : “POWELL SAYS INFLATION EXPECTATIONS ARE ANCHORED, THEY ARE AT A GOOD PLACE RIGHT NOW”
Matt Graham : “POWELL: RATE INCREASES ARE NOT AT ALL THE FOCUS OF THE COMMITTEE RIGHT NOW”
Matt Graham : “POWELL SAYS NEAR TERM DISCUSSION THAT WILL BEGIN IS ABOUT THE PATH OF ASSET PURCHASES”
Matt Graham : “”path of asset purchases” = taper, fyi”
Mike Hardy : “Just locked my escrow that I opened today because of the alert given here. Love this service and all it does for me and my clients Matt.”
Matt Graham : “POWELL: WE WILL DO WHAT WE CAN TO AVOID A MARKET REACTION”