MBS RECAP: As Initial Headline Shock Fades, Bonds Level-Off

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The amount of geopolitical turmoil in the world today is not materially better than yesterday, but without new surprises to fuel safe-haven demand, bond markets found no reason to extend the rally.  That said, if the rally was somehow overdone or made stronger by something like 'snowball buying,' we would know it today.  The fact that there wasn't a more pronounced pull-back is a testament to the gravity of the situation and the real presence of safe-haven demand yesterday.

MBS started the day about 3/32nds weaker and are now heading out in roughly the same territory.  The weakness was more severe heading into the noon hour, but 10 yields had a firm bounce at 2.50%, which marked the end of selling momentum in bond markets for today.

Weekends can always bring significant developments when it comes to geopolitical market movers.  More often than not, if US bond markets have rallied on geopolitical risk heading into the weekend, they move in the opposite direction the following week.  As far as how that plays out this time, volatility is potentially higher than normal considering a relative lack of calendar events in the week ahead.  That may leave markets even more sensitive to headlines as there's not much else going on.

The week after that is the polar opposite, with the first look at Q2 GDP, an FOMC Announcement, and NFP on Friday.  It may well set the tone for the next major move.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live. Pricing as of 7/18/14 4:01PMEST Today's Reprice Alerts and Updates 1:10PM  :  Sell-Off Subsides For Now; Slightly Diminishing Reprice Risk 12:28PM  :  ALERT ISSUED: Negative Reprices Increasingly Possible 11:21AM  :  ALERT ISSUED: On Shaky Ground; Negative Reprice Risk Looming 9:03AM  :  Bond Markets Weaker Overnight; Bouncing Back Into Domestic Session sklodzin  :  "Hey all, do any of you know of a specific rule that dictates the need to separate non married coborrowers on 1003's?" Josh Olson  :  "UW question: Condo purchase, Conv financing, 80% LTV, 808 credit, 183 units BUT 30% owned by investment group. Who will finance this loan?" Joseph Moran  :  "first rate sheet of the day. basically no change" Dan Clifton  :  "josh that should be fairly easy. at 80% you need a full review which is appraisal, condo questionnaire, budget, condo docs insurance, the max number of investment units is 49% on conventional for exisiting complexes" Brent Borcherding  :  "JO, is there a specified reason the group owns the 30%. We have an investment condo in Chicago that the builder was required to keep 30% for rentals in a redeveloping neighborhood, it was part of the agreement with the city. Fannie approves the condos, on a case by case basis, if documented." Josh Olson  :  "DC: Fannie Mae MRI guide states no more than 10%" Oliver Orlicki  :  "mg, we on the 3.5 or 4?" Alan Craft  :  "3.5 most relevant right now" Matthew Graham  :  "yes. 4.0 is relevant, but 3.5 certainly more relevant to reprice risk." Discuss the MBS and Mortgage Markets on Our Streaming Dashboard

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MBS Day Ahead: Basically Just Waiting on Geopolitical Risk; Dangerous Game for Bonds

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Although economic data had some small role to play in yesterday's strong bond market rally, the day was really all about geopolitical risk.  If we've learned anything about geopolitical risk as a market mover, it's to not rely on it as a long term guidance giver. 

Even after the risk merely levels off, markets usually bounce back.  Maybe not today, maybe not tomorrow...  Maybe not even soon, but on the other hand, it could be soon!  Point being: don't take the newfound move of 10yr yields into the 2.4's for granted.

Heck, we can't even take the same low-rate pleasure in 2.4+ 10yr yields as we did in late may because MBS have been lagging Treasuries so much.  Thankfully though, that SHOULD put us in a better position going forward--one where MBS is more willing to keep pace with any additional rallies and less compelled to keep pace with Treasury weakness if we go the other direction.

If we do happen to turn a corner today or Monday, the implications are pretty depressing from a technical standpoint.  Such a bounce would not only end up contributing to a long term inflection range from 2.40 to 2.51, but it would also introduce new technical signals with longer term implications. 

One of these would be a "bearish divergence" in RSI.  RSI, or the "Relative Strength Index" is one of the most popular momentum indicators around.  When its line is moving up or down, momentum is increasing in the direction of the movement.  When the line hits either horizontal level at 30 or 70 (it's always 0-100), the security is overbought or oversold, which basically means it's ripe for a correction as soon as it crosses back over the horizontal line heading the other direction.

A bearish divergence occurs when momentum is telling a different story than the charted security--in this case, 10yr yields.  Note in the chart below that (IF we bounce higher in yield soon) that yields will have bounced at lower lows than those seen in late June, yet the RSI line will be bouncing at higher lows.  The conclusion is that underlying momentum doesn't support the the increasingly aggressive rally. 

Keep in mind, that's just one technical study.  It wouldn't necessarily doom rates to a an epic sell-off.  But it does serve as a reminder of the ephemeral nature of geopolitically-motivated rallies, and would be one more mark against the sustainability of current levels.

Whether or not things play out in this manner remains to be seen.  Markets are essentially reduced to headline watching today as the event calendar is light.  One thing to keep in mind is that geopolitical risk often undergoes significant change over the weekend, so it's less safe than normal to assume Monday's rates will be close enough to Friday's. 

That's a double-edged sword though.  A bigger flare up in risk could make for bigger improvements.  Simply put: more risk, more reward when it comes to floating, but if recent history and technicals are an indication, "risk" is probably still edging out reward if the rally doesn't continue in spades today.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

MBS RECAP: Market Monotony Broken By Geopolitical Events; Big Rally For Bonds

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Today offered a triple or possibly quadruple-whammy for bond markets, almost exclusively in the form of overseas events.  The weakest among these was the notion that yesterday's announcement of new sanctions against Russia was a profound market mover.  While that's technically possible, it wasn't plainly evident in overnight trading.

By the start of the domestic session, bond markets were only in slightly stronger territory.  The next boost was the only domestic consideration today.  June Housing Starts came in much weaker than expected and broke below a trend of growth that had been intact since the beginning of 2011.  Bond markets improved on the data, despite a stronger-than-expected Jobless Claims report. 

Trading proceeded in relatively uneventful fashion until the day's first geopolitical catastrophe unfolded when news hit of a Malaysian airliner being shot down on the Russia/Ukraine border.  this set the tone for the rest of the day as bond markets rallied steadily and stocks moved lower. 

This brought 10yr yields right to the important 2.47% level before the last major geopolitical headline came out.  Just after 3pm, Al-Jazeera reported that Israel launched a major ground/air/sea assault on Gaza.  Market reaction was sporadic, peaking in intensity at 3:15pm, but never really doing anything but carry yields and stocks lower.  Israel confirmed the news at 3:40pm.

As is always the case when it comes to global flights to safe-haven assets, Treasuries outperformed MBS handily.  Even so, MBS weren't completely tuned out from the rally, managing to gain 3/8ths of a point by the end of the day.  This brings Fannie 3.5s to 102-15.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live. Pricing as of 7/17/14 5:04PMEST Today's Reprice Alerts and Updates 4:09PM  :  Israel Ground Offensive in Gaza Sends Bond Yields Lower Still 2:17PM  :  Ongoing Positive Reprice Potential as Treasuries/MBS Hold Gains 10:08AM  :  Strong Philly Fed Data Reinforces Bounce Toward Weaker Levels 9:37AM  :  Bond Markets Stronger Overnight, and Another Boost From Weak Housing Data Matthew Graham  :  "yeah, it's still pretty sudden. And just because MBS are better positioned to soak up weakness doesn't mean a run to 2.66 in Treasuries wouldn't hurt" Hugh W. Page  :  "Still don't trust this rally just yet. Need some follow through IMO. I think for short timers it's a lock opportunity." Roland Wilcox  :  "MG so timely just shared analogy w/client who inquired about 10yr/MBS relationship" Sung Kim  :  "thank you MG, that really helped" Matthew Graham  :  "conversely, if broader markets lose ground, MBS will have already been lagging behind, and thus potentially not lose ground at the same pace." Matthew Graham  :  "That's what I meant by "slingshot" if broader markets improve." Matthew Graham  :  "when MBS are underperforming, they're like the dog pulling back reluctantly on the leash. Right now it's pretty stretched. If the master continues to walk forward, it could make for a relatively rapid move forward by the dog." Matthew Graham  :  "In this analogy, the "leash" is stretchy " Matthew Graham  :  "Let's begin by recalling an analogy we sometimes use of the 'Master and the Dog.' The overall momentum in bond markets is like the Master. The best benchmark we have for that is 10yr yields, which is why we talk about them so much. MBS are like the dog (and no, there's no deeper meaning here). The master sets the course for where the two will walk but the dog can tug at the leash--either reluctantly or eagerly. " Sung Kim  :  "MG, would you mind expounding on that comment?" Hugh W. Page  :  "That insight is invaluable info" Matthew Graham  :  "The fact that Treasuries are here with MBS having underperformed so consistently for the past 1.5 weeks may set us up for a bit of a slingshot if broader market stays strong, or to better endure weakness if broader markets bounce." Andy Pada, Jr.  :  "the real time chart is such an amazing tool" Andy Pada, Jr.  :  "as horrible the circumstances may be, I was able to lock in a bunch on live pricing at noon. " Discuss the MBS and Mortgage Markets on Our Streaming Dashboard

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MBS Day Ahead: Busiest Day of Econ Data as Bonds Try for Underdog Victory

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In a sense, bond markets came into the week as an underdog.  They'd rallied the entire previous week to the lowest levels in over a month.  And by Friday, that rally momentum was being shed in just such a way that suggested a correction was possible to start the current week. 

While that technically happened (Monday and Tuesday were weaker), it's been a fairly half-hearted effort so far.  In the process, bonds have managed to give off new signals that they might be rethinking the correction that looked like it was underway.

Some of these signals come from various technical studies.  These can be seen in the following chart in the the white-circled areas.  From top to bottom:

1. yields have bounced 2 days in a row on the middle Bollinger Band (21-day moving average)

2. Yesterday's stochastic cross in favor of higher yields will 'uncross' today if rates merely hold flat (more simply: when the purple line is under the green line, it's better for rates)

3. MACD is no longer ascending (more simply: blue bars go up = bad.  Down=good)

4. RSI stalled (More simply: red line in the lower half of the horizontal range = good.  Red line NOT ascending = good).

In short, there was some negative momentum, and now it's showing signs of stalling.  A flat or stronger session would confirm this.

The extent to which bonds respond to the economic data remains to be seen, but if any day this week has a chance to see data move markets, this is it.  Jobless Claims happen every week, but one week each month is more important than the rest because it coincides with the pay period that determines the next NFP number.  Today's is the important one. 

In addition, Housing Starts are out at the same time.  If these two reports happen to be on the same page, it will probably be worth something in terms of trading momentum.  Then at 10am, the Philly Fed Survey is always a solid 2nd tier contributor to the econ data landscape.  In other words, it's always capable of moving markets when it's decidedly better or worse than expected.  Things die down quickly after that, so any momentum that's intact after the data stands a good chance of carrying through the rest of the week.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

MBS RECAP: Market Monotony Broken By Geopolitical Events; Big Rally For Bonds

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Today offered a triple or possibly quadruple-whammy for bond markets, almost exclusively in the form of overseas events.  The weakest among these was the notion that yesterday's announcement of new sanctions against Russia was a profound market mover.  While that's technically possible, it wasn't plainly evident in overnight trading.

By the start of the domestic session, bond markets were only in slightly stronger territory.  The next boost was the only domestic consideration today.  June Housing Starts came in much weaker than expected and broke below a trend of growth that had been intact since the beginning of 2011.  Bond markets improved on the data, despite a stronger-than-expected Jobless Claims report. 

Trading proceeded in relatively uneventful fashion until the day's first geopolitical catastrophe unfolded when news hit of a Malaysian airliner being shot down on the Russia/Ukraine border.  this set the tone for the rest of the day as bond markets rallied steadily and stocks moved lower. 

This brought 10yr yields right to the important 2.47% level before the last major geopolitical headline came out.  Just after 3pm, Al-Jazeera reported that Israel launched a major ground/air/sea assault on Gaza.  Market reaction was sporadic, peaking in intensity at 3:15pm, but never really doing anything but carry yields and stocks lower.  Israel confirmed the news at 3:40pm.

As is always the case when it comes to global flights to safe-haven assets, Treasuries outperformed MBS handily.  Even so, MBS weren't completely tuned out from the rally, managing to gain 3/8ths of a point by the end of the day.  This brings Fannie 3.5s to 102-15.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live. Pricing as of 7/17/14 5:04PMEST Today's Reprice Alerts and Updates 4:09PM  :  Israel Ground Offensive in Gaza Sends Bond Yields Lower Still 2:17PM  :  Ongoing Positive Reprice Potential as Treasuries/MBS Hold Gains 10:08AM  :  Strong Philly Fed Data Reinforces Bounce Toward Weaker Levels 9:37AM  :  Bond Markets Stronger Overnight, and Another Boost From Weak Housing Data Matthew Graham  :  "yeah, it's still pretty sudden. And just because MBS are better positioned to soak up weakness doesn't mean a run to 2.66 in Treasuries wouldn't hurt" Hugh W. Page  :  "Still don't trust this rally just yet. Need some follow through IMO. I think for short timers it's a lock opportunity." Roland Wilcox  :  "MG so timely just shared analogy w/client who inquired about 10yr/MBS relationship" Sung Kim  :  "thank you MG, that really helped" Matthew Graham  :  "conversely, if broader markets lose ground, MBS will have already been lagging behind, and thus potentially not lose ground at the same pace." Matthew Graham  :  "That's what I meant by "slingshot" if broader markets improve." Matthew Graham  :  "when MBS are underperforming, they're like the dog pulling back reluctantly on the leash. Right now it's pretty stretched. If the master continues to walk forward, it could make for a relatively rapid move forward by the dog." Matthew Graham  :  "In this analogy, the "leash" is stretchy " Matthew Graham  :  "Let's begin by recalling an analogy we sometimes use of the 'Master and the Dog.' The overall momentum in bond markets is like the Master. The best benchmark we have for that is 10yr yields, which is why we talk about them so much. MBS are like the dog (and no, there's no deeper meaning here). The master sets the course for where the two will walk but the dog can tug at the leash--either reluctantly or eagerly. " Sung Kim  :  "MG, would you mind expounding on that comment?" Hugh W. Page  :  "That insight is invaluable info" Matthew Graham  :  "The fact that Treasuries are here with MBS having underperformed so consistently for the past 1.5 weeks may set us up for a bit of a slingshot if broader market stays strong, or to better endure weakness if broader markets bounce." Andy Pada, Jr.  :  "the real time chart is such an amazing tool" Andy Pada, Jr.  :  "as horrible the circumstances may be, I was able to lock in a bunch on live pricing at noon. " Discuss the MBS and Mortgage Markets on Our Streaming Dashboard

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MBS RECAP: As Initial shock fades, bonds bearing

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The amount of the geopolitical upheavals in the world today is not materially better than yesterday, but no new surprises to the refuge fuel demand for bonds markets found no reason to extend the rally.  That said, if the rally has been somewhat exaggerated or made stronger by something like 'buy snowball', we would know it today.  The fact that there was not a more pronounced discharge reflects the seriousness of the situation and the real presence of the request for refuge yesterday.

MBS has started the day on the lowest of 3/32 and now go out in pretty much the same territory.  The weakness was most severe at the noon hour, but 10 yields had a firm rebound to 2.50%, which marked the end of the sale of momentum in markets bond for today.

Weekends can still bring significant developments when it comes to geopolitical market drivers.  More often than otherwise, if bond U.S. markets rallied on geopolitical risk heading into the weekend, they move in the opposite direction the next week.  As far as how that is played this time, volatility is potentially higher than normal because of a relative lack of events in the calendar in the coming week.  That leave markets more sensitive to headlines that it there are not many other things.

The week after is the opposite, with the first glance at the Q2 GDP, one announcement from the FOMC and NFP Friday.  It could well set the tone for the next major.

Priced below are delayed, note the timestamp at the bottom. Real time pricing is available via MBS's Live. Price starting from 18/07/14 4:01PMEST re-evaluated today alerts and updates 13:10 : Sell-Off is quiet for the moment. Decreasing slightly recalculate the risk 12:28 : alert issued: negative Reprices increasingly more Possible 11:21 : issued alert: tottering; Negative affect risk lurks 09:03 : Bond markets more low during the night; Bouncing Back in-house Session sklodzin : «"Hi all, does anyone of you know a specific rule that dictates the need to separate the coborrowers unmarried 1003?". Josh Olson : "question of UW: purchase of Condo, Conv, financing, 80% LTV, credit 808, 183 units, but 30% owned by investment group." Who will finance this loan?" Joseph Moran : "first sheet of daily rates. basically unchanged" Dan Clifton :"josh which should be pretty easy. 80% you need a comprehensive review, which is the assessment, questionnaire of condo, budget, insurance condo docs, the maximum number of investment shares is 49% on existing complex classics " Brent Borcherding :" OJ, is there a pattern specified for the Group holds 30%. "" We have an investment condo in Chicago that the constructor was required to maintain the 30% for rentals in a redevelopment district, he was part of the agreement with the city. Fannie approves condo projects, on a case by case, if documented." Josh Olson : "DC: Fannie Mae MRI guide indicates no more than 10%" Oliver Orlicki : "mg, we on the 3.5 or 4? '' Alan Craft : "most relevant 3.5 at the moment" Matthew Graham : 'Yes. 4.0 is relevant, but certainly more relevant 3.5 to the attributable risk. "Discuss the MBS and mortgage markets on our dashboard streaming"

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MBS Day Ahead: Basically Just Waiting on Geopolitical Risk; Dangerous Game for Bonds

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Although economic data had some small role to play in yesterday's strong bond market rally, the day was really all about geopolitical risk.  If we've learned anything about geopolitical risk as a market mover, it's to not rely on it as a long term guidance giver. 

Even after the risk merely levels off, markets usually bounce back.  Maybe not today, maybe not tomorrow...  Maybe not even soon, but on the other hand, it could be soon!  Point being: don't take the newfound move of 10yr yields into the 2.4's for granted.

Heck, we can't even take the same low-rate pleasure in 2.4+ 10yr yields as we did in late may because MBS have been lagging Treasuries so much.  Thankfully though, that SHOULD put us in a better position going forward--one where MBS is more willing to keep pace with any additional rallies and less compelled to keep pace with Treasury weakness if we go the other direction.

If we do happen to turn a corner today or Monday, the implications are pretty depressing from a technical standpoint.  Such a bounce would not only end up contributing to a long term inflection range from 2.40 to 2.51, but it would also introduce new technical signals with longer term implications. 

One of these would be a "bearish divergence" in RSI.  RSI, or the "Relative Strength Index" is one of the most popular momentum indicators around.  When its line is moving up or down, momentum is increasing in the direction of the movement.  When the line hits either horizontal level at 30 or 70 (it's always 0-100), the security is overbought or oversold, which basically means it's ripe for a correction as soon as it crosses back over the horizontal line heading the other direction.

A bearish divergence occurs when momentum is telling a different story than the charted security--in this case, 10yr yields.  Note in the chart below that (IF we bounce higher in yield soon) that yields will have bounced at lower lows than those seen in late June, yet the RSI line will be bouncing at higher lows.  The conclusion is that underlying momentum doesn't support the the increasingly aggressive rally. 

Keep in mind, that's just one technical study.  It wouldn't necessarily doom rates to a an epic sell-off.  But it does serve as a reminder of the ephemeral nature of geopolitically-motivated rallies, and would be one more mark against the sustainability of current levels.

Whether or not things play out in this manner remains to be seen.  Markets are essentially reduced to headline watching today as the event calendar is light.  One thing to keep in mind is that geopolitical risk often undergoes significant change over the weekend, so it's less safe than normal to assume Monday's rates will be close enough to Friday's. 

That's a double-edged sword though.  A bigger flare up in risk could make for bigger improvements.  Simply put: more risk, more reward when it comes to floating, but if recent history and technicals are an indication, "risk" is probably still edging out reward if the rally doesn't continue in spades today.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

MBS Day Ahead: Busiest Day of Econ Data as Bonds Try for Underdog Victory

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In a sense, bond markets came into the week as an underdog.  They'd rallied the entire previous week to the lowest levels in over a month.  And by Friday, that rally momentum was being shed in just such a way that suggested a correction was possible to start the current week. 

While that technically happened (Monday and Tuesday were weaker), it's been a fairly half-hearted effort so far.  In the process, bonds have managed to give off new signals that they might be rethinking the correction that looked like it was underway.

Some of these signals come from various technical studies.  These can be seen in the following chart in the the white-circled areas.  From top to bottom:

1. yields have bounced 2 days in a row on the middle Bollinger Band (21-day moving average)

2. Yesterday's stochastic cross in favor of higher yields will 'uncross' today if rates merely hold flat (more simply: when the purple line is under the green line, it's better for rates)

3. MACD is no longer ascending (more simply: blue bars go up = bad.  Down=good)

4. RSI stalled (More simply: red line in the lower half of the horizontal range = good.  Red line NOT ascending = good).

In short, there was some negative momentum, and now it's showing signs of stalling.  A flat or stronger session would confirm this.

The extent to which bonds respond to the economic data remains to be seen, but if any day this week has a chance to see data move markets, this is it.  Jobless Claims happen every week, but one week each month is more important than the rest because it coincides with the pay period that determines the next NFP number.  Today's is the important one. 

In addition, Housing Starts are out at the same time.  If these two reports happen to be on the same page, it will probably be worth something in terms of trading momentum.  Then at 10am, the Philly Fed Survey is always a solid 2nd tier contributor to the econ data landscape.  In other words, it's always capable of moving markets when it's decidedly better or worse than expected.  Things die down quickly after that, so any momentum that's intact after the data stands a good chance of carrying through the rest of the week.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

MBS day: busiest day of data Econ as bonds Try for the victory of the outsider

In a sense, the bond markets came into the week as an outsider.  They had rallied throughout the previous week at lower levels in addition to a month.  And Friday, the momentum rally was was paid just in a way that suggested a correction was possible to start the current week.

While technically happened (Monday and Tuesday were the weakest), it was a pretty shy effort so far.  In the process, bonds have managed to generate new signals they might be rethinking the correction that looked as if it was ongoing.

Some of these signals come from various technical studies.  These can be seen in the following table in the areas circled in white.  From top to bottom:

1. the yields have rebounded 2 days in a row on the Middle Bollinger band (21-day moving average)

2 cross for stochastic yesterday in favour of higher yields is ' uncross "today if rates simply keep the dishes (more simply: when the purple line is the green line, it's better for rates)"

3 MACD is no longer increasing order (more simply: Blue bars back = bad.)  In down = good)

4 RSI has landed (more simply: a red line in the half horizontal Beach = good lower.)  Red line only ascendant not = good).

In short, there were a few negative pulse, and now it is showing signs of stalling.  A plate or stronger session would confirm this.

The measure which obligations comply with the economic data remains to be seen, but if any day this week has a chance to see the data to move markets, that's it.  Unemployment occur every week, but a week each month is more important than the rest because it coincides with the pay period that determines the next number of the NFP.  Today is the important thing.

In addition, starts are at the same time.  If these two reports are on the same page, it is probably worth something in terms of dynamic negotiation.  Then at 10, the Philly Fed survey is still a solid 2nd level contributor in the landscape of data econ.  In other words, it is still capable of mobile markets when it is decidedly better or worse than expected.  Things die down quickly after that, then all the momentum that is intact after data goes a good chance to carry out the rest of the week.

Priced below are delayed, note the timestamp at the bottom. Real time pricing is available via MBS's Live.

MBS RECAP: Day without incident of bonds markets relatively stable sheets; Registered results below MBS

Access to more precise indications in time real back months TBA Thomson Reuters and Tradeweb. More MBS RECAP: day without incident of obligations leaves markets relatively stable; Registered results below MBS

As the trades last few day trickle in, MBS are fixed to close almost perfectly in line with levels of closing yesterday.  Even before that, it was not eventful to talk about.

The main force of European trade has been slightly negative this morning, but the MBS and treasuries remained inside the lowest levels of yesterday.  Producer prices came in 'good health', and while some credited these data further weakness in the morning, I do not see it.  Obligations were already on a recovery and we are talking about the yields of about 2,560 to 2.567 in 10 years.

It is a bit easier to make a case for the weaker Industrial Production at 9:15 as a modest benefot to bond markets.  More than anything , collapse of stocks and flows of "asset allocation" (fund managers sell stocks to buy bonds) helped keep the range contained for MBS.

Despite the diversity of content, however, MBS has struggled somewhat compared to the Treasury bills.  10 yr yields are close to their 2 best days levels while MBS are roughly in the middle of their.  This incompetence has been a fairly constant theme for almost 2 weeks now.

Second day of Yellen's testimony provided Congressional nothing more that a few good laugh.  There is no significant market reaction.  The calendar is a bit more go tomorrow with unemployment insurance, starts and Philly Fed.

Priced below are delayed, note the timestamp at the bottom. Real time pricing is available via MBS's Live. Price starting from 16/07/14 4:42PMEST recalculate alerts and updates of today 11:10 : return to unchanged as Stocks Slide levels 09:05 : slightly lower than after neutral bond markets night Session Nathan Miller : "thx rob, it's, you know their requirement of pmt down on a purchase off-hand?" Robert clark : "#NMSI if the loan amount exceeds $ 417,000" Nathan Miller : "Apart from hard money lenders, someone knows a lender from income reported for a deal in CA? self emp brwr. » William Hansen : "10 yr green red FNMA 3.5." I hope that the FNMA is transformed. "Discuss the MBS and mortgage markets on our dashboard streaming"

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Bonds continue to rule weak; call rates move down

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MUMBAI: The government bond (G-Sec) prices continued to rule weak on consistent selling pressure from banks and corporates.

The overnight call money rate dipped further on surfeit of liquidity in banking system.

The 8.83 per cent government security maturing in 2023 dropped to Rs 100.3900 from Rs 100.6325 previously, while its yield rose to 8.77 per cent from 8.73.

The 8.60 per cent government security maturing in 2028 declined to Rs 99.74 from Rs 99.9375, while its yield gained to 8.63 per cent from 8.61 per cent.

The 8.35 per cent government security maturing in 2022 fell to Rs 97.55 from Rs 97.64, while its yield moved-up to 8.79 per cent from 8.77 per cent

The 8.12 per cent government security maturing in 2020, the 8.28 per cent government security maturing in 2027 and 7.80 per cent government security maturing in 2020 were also quoted lower at Rs 96.92, Rs 96.00 and Rs 95.60, respectively.

The overnight call money rates ended lower at 8.20 per cent from yesterday's closing level of 8.95 per cent. It moved in range of 9.00 per cent and 8.00 per cent, respectively.

Meanwhile, the Reserve Bank of India ( RBI), under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 219.65 billion in 58-bids at the 1-day repo auction at a fixed rate of 8.00 per cent today morning, while it sold securities worth Rs 14.57 billion from 14-bids at the 1-day reverse repo auction at a fixed rate of 7.00 per cent yesterday evening.

Budget 2014: Bonds, rupee give up gains; deficit target seen as 'challenging'

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MUMBAI: Indian bonds and the rupee currency ended weaker on Thursday, retreating from earlier one-week highs, on scepticism about whether the new government of Prime Minister Narendra Modi can achieve its ambitious fiscal deficit target.

Bond prices and the rupee had initially rallied after Finance Minister Arun Jaitley stuck to the fiscal deficit target of 4.1 per cent of gross domestic product for this fiscal year set by the previous government.

The government also revised upwards the market borrowing to a gross 6 trillion rupees ($100.42 billion) from 5.97 trillion rupees in the interim budget, well within analysts' expectations.

But some of the optimism faded as Moodys' Investors Service and Fitch Ratings expressed doubts whether the government could meet that target, pointing to the lack of specific details about ways to meet spending and revenue projections.

"The budget was a bit of a disappointment in terms of no clear roadmap for reduction of subsidies or how the tax revenue will be achieved," said Bekxy Kuriakose, head of fixed income at Principal PNB Asset Management.

The benchmark 10-year bond yield at one point fell as much as 9 basis points on the day to 8.64 per cent, its lowest since July 3. The yield closed up 4 basis points on the day, at 8.77 per cent.

The partially convertible rupee earlier rose as high as 59.57 per dollar, its strongest since July 3. The unit ended at 60.19/20, versus the previous close of 59.75/76, down 0.8 per cent on the day,

Traders said there was also some paring of positions ahead of Friday's 150-billion-rupee ($2.49-billion) bond auction.

"Inflation will be key, going ahead and supply will remain a concern," Kuriakose added.

In his speech, Jaitley announced a slew of proposals, including raising the limit on foreign direct investment in defence and insurance ventures to 49 per cent from 26 per cent, which is expected to help the rupee in the medium- to longer- term.

The tight fiscal deficit targets are expected to help keep a lid on prices, a critical factor in a country where consumer price inflation was 8.28 per cent in May, and could potentially allow the Reserve Bank of India some room to cut interest rates.

However, Moodys' and Fitch said the government would need to provide more details of how it would meet the fiscal deficit target.

"From a ratings perspective, it is mildly positive to see there's a roadmap, but the lack of details gives us pause," Moody's sovereign rating analyst Atsi Sheth told Reuters in a telephone interview.

"The intent appears to be there, but the measures have not been really thought through yet," Sheth added.