MBS Highway Daily Updates 06/05/2023
Current position: Carefully Floating
Stocks are near unchanged levels and Mortgage Bonds are lower following Saudi Arabia's oil production cuts.
OPEC+ Oil Production
Over the weekend the Organization of the Petroleum Exporting Countries and its partners, known as OPEC+, met and announced that they would be making no changes to its planned oil production cuts for the rest of the year. Unfortunately, the world's top oil exporter, Saudi Arabia, announced that it would be voluntarily reducing its output to 9 million barrels a day from 10 million. These output cuts will be implemented in July.
President Biden on Saturday signed the Debt Ceiling bill, which suspends the U.S.government's debt ceiling, averting the risk of a default with just days to spare. The Treasury Department will now need to issue a large number of T-bills in order to refill The Treasury General Account, which is basically the government's checking account.
Mortgage Bonds are lower following the oil production cuts announced by Saudi Arabia, but Bonds are well off their lows from earlier this morning. MBS are trading in the middle of an extremely wide range with support at 99.125 and resistance at 99.845.
The 10-year is trading at around 3.74% and nearing a ceiling at 3.77%. Begin the day very carefully floating.