08:52 am - Dip Bought : Trade swooped in at the open and picked prices up off the floor but volume remains light and there's little reason to expect an early rally won't meet with profit taking. Supply continues to get the better of demand (risk aversion) and today's announcement of funding requirements (supply) will likely keep prices from getting too far ahead of themselves. ADP said there were about 157K private sector jobs lost in Oct while consensus sits at -200K (total). Spread trade looks to be guiding some of the flows with steepeners still coming off. The 2-10-yr yield spread is flatter at 231.8.
08:24 am - Working Out of a Hole : The market was falling off with trade opting for profits on yesterday's stealth rally but
the open is seeing bids firm up. The safe-haven flows are abating, with lower Libor rates reflecting better sentiment in short-term funding by way of Fed injections. But mortgage rates remain sticky with 30-yr fixed rates jumping to 6.47% (+21 basis points over last week) according to MBA, suggesting none of benefits of the facilities (or GSE bailouts, or rate cuts) are getting passed through to the consumer, yet. Regardless,
trade is shifting focus to the quarterly refunding whose size gets announced today. Expectations continue to rise with a near tripling over Q3 requirements. The
2-10-yr yield spread is flatter at 234 as trade unwinds some of the week's steepening. Bond prices in the EuroZone are down on the mention of a German stimulus package while in Japan bonds were sold with equities bid. Treasuries will digest the larger services ISM with contraction expected. Job cuts were up 79% yoy according to Challenger while ADP sees a -157K chop in payrolls Fri (private sector). Beyond supply trade will be eyeing the stocks for kinks in their rally now that the election is over and the weak economy gets back in the spotlight. The dollar is chipping away at the euro's gains this week but still looking caught between 1.27 and 1.30 while the yen is mildly stronger, knocking the buck under 99. Spot gold is slipping at 759.69 (-3.56) as is crude at 68.62 (-1.91).
ISM services are at 10 with the Treasury refunding announcement hitting mid-morning.
07:33 am - Mortgage Applications : The weekly MBA mortgage applications index plunged 20.3% l(lowest in nearly 8 years according to Bloomberg) ast week with refis down 27.8% and purchasing applications down 13.9%. The fixed 30-yr mortgage rate rose to 6.47% (+21 basis points) while the 15-yr popped to 6.14% (+13 bps) & 1-yr adjustable rate mortgages dipped to 6.86% (-4 bps).