MBS
-17/32 @ 99.20 10 Yr T +2/32
@ 2.6310 DOW -8 @ 15291
MBS are down -17/32 (FNMA 30-yr 3.5 at 99.20), around 14/32 below
morning levels, and near the low for the day. Unfavorable repricing took place.
MBS prices dropped after the release of the Fed Minutes from the June 19 FOMC
meeting. The Minutes did nothing to remove the uncertainty investors have about
the timing of Fed policy changes (see below), and the result was that investors
sold MBS and Treasuries. No economic data came out today. Demand was close to
average for the 10-yr Treasury auction. Oil prices rose to the highest level
since May 2012. Fed Chief Bernanke will be speaking in a few minutes at 4:10
et. Tomorrow, Import Prices and Jobless Claims will be released at 8:30 et. The
results from the 30-yr Treasury auction will come out around 1:00 et.
The FOMC Minutes from the June 19 Fed meeting did little to answer the question of when the Fed will begin to taper its bond purchase program. If anything, investors are more uncertain now than before the release of the Minutes. According to the Minutes, roughly half of Fed officials believe that if the economy stays on its present course the Fed should end its bond purchases completely by the end of this year. This would be well ahead of the expected timeline suggested by Bernanke after the June 19 Fed meeting. On the other hand, many Fed officials feel that the labor market must improve significantly before the Fed should even begin to scale back its bond purchases. In short, Fed officials agree that Fed policy should depend on upcoming economic data, but they diverge widely on what level of
The FOMC Minutes from the June 19 Fed meeting did little to answer the question of when the Fed will begin to taper its bond purchase program. If anything, investors are more uncertain now than before the release of the Minutes. According to the Minutes, roughly half of Fed officials believe that if the economy stays on its present course the Fed should end its bond purchases completely by the end of this year. This would be well ahead of the expected timeline suggested by Bernanke after the June 19 Fed meeting. On the other hand, many Fed officials feel that the labor market must improve significantly before the Fed should even begin to scale back its bond purchases. In short, Fed officials agree that Fed policy should depend on upcoming economic data, but they diverge widely on what level of
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