Stocks are rallying hard to begin Wednesday’s exchange as the S&P500 looks to close out October on a positive note. Stronger-than-expected earnings reports from Facebook (FB), and General Motors (GM) coupled with positive private-payrolls data to bolster sentiment on the street. The S&P500 is currently trading at 2,720.11, 1.40% higher, and is 1.80% higher YTD.
Treasuries are moving slightly lower in the AM after private payrolls were reported stronger-than-expected. ADP reported 227K jobs added for the month of October, heftily exceeding analyst estimates of a 187K increase. September’s initial reading was revised down 12K to 218K. On top of this, the UST department is going to raise the amount of long-term debt issued to $83 billion in Q3, marking the fourth consecutive quarterly increase. The US 10-Yr Note is currently trading at 3.1416%, 0.0189 higher.
MBS Performance and Volumes
MBS outperformed their Treasury hedge ratios on Thursday, as equities stabilized and Treasury yields moved higher. 30-year Fannies and Ginnie IIs exhibited an up-in-coupon bias; Fannie and GNII 4.5s outperformed the 10-year note by 4 and 3 ticks, respectively, while 3s outpaced 10s by 1/32. 15-year Fannies also outperformed the 5-year note by 1-2 ticks, with fuller coupons (3.5s and 4s) having the strongest session. Trading volumes remained moderate, with just under $163 billion in total trades, although spec pool activity remains very light, with $8 billion in trades reported by FINRA.
TBA MBS’ are slightly lower to begin Wednesday’s exchange, holding firm in the presence of a strong employment report. This week, FNCL/G2SF 4.5’s are down 6 and 4+ tics respectively as trade tensions cool and global equities pare losses. Liquid coupons are currently trading 1+ – 2 tics lower.
The USD is trading marginally higher in the AM as the DXY continues to hover near a 16-month high. The DXY is currently trading at 97.09, 0.09% higher.
Oil is little changed as supply fears continue to permeate through investor psyche. WTI is currently trading at 66.29, 0.17% higher.