Mortgage Backed Securities (MBS) Overview
MBS have moved in a very narrow range today – unable to make any real gains, as there was strong overhead resistance. And receiving terrific support prevented any real sell off (at this time). MBS were +3BPS when the first rate sheets hit at 10:00 EDT and were up +8BPS as of 3:30 EDT. That is only an intra-day change of +5BPS from the first rate sheets. Pretty boring in MBS land!
The only major economic release today was Existing Home Sales. which were lighter than expected (0.3% vs estimate of 0.5%), but came in at the highest annualized rate for 2014. Not a real factor in pricing.
Ebola: There is a 5 year old that is being tested in New York City, and a couple more states (New York and New Jersey) have instituted mandatory quarantines for any one traveling from known Ebola countries.
ECB: They release their covered bond purchase information the Monday following their purchases. So, today we found out that the big kick-off to their new program started with just a mere EUR 1.7M of covered bonds last week. A lot more cash is needed in order for this to start to impact pricing.
Tomorrow will be very important Durable Goods Orders and also Consumer Sentiment as the market waits for the last piece of real economic data before Wednesday’s FOMC meeting.