MBS AFTERNOON: Autopilot Engaged into Close
Anyone out there?
All quiet on our end as market participants pack up and head for the exits. Ninja has engaged autopilot for the rest of the day.....(ninja = our MBS trader pal). Only major concern remaining is last minute position squaring while everyone is oblivious to the bid.
The earlier price highs brought out a few originators looking to lock up pipeline profits...in total we saw under $1.5 billion hit bid lists, some of which was taken down by servicers looking to add duration while old faithful...the Fed...waived in over $4 billion...more than enough support for originators.
More importantly to you...TSY yields ticked a few bps higher in the lunch hour and although MBS stood strong against their benchmark big brother's better wishes (spreads tighter)...rate sheet influential prices suffered a 10 tick loss....back towards good ol PARNERTIA!!!
Unfortunately the move off the 100-08+ high to 99-30 led to a few reprices for the worse...recalled rate sheets were however not broad based...spotty at most. Just as parnertia pulls prices lower...it pulls them higher! SEEEEEEE.....
In the futures market, the SEPT 10 YR TSY contract has been stuck at the 117-10 level since lunch. Just for fun, here's a screen shot of the trade log:
Fun right? Woooooooooo!!!! (note sarcasm)
Here's how it looks graphically...
On the way up we noted that short covering led to a little added umph in the rally, then on the way down profit taking made for a faster fall...because MBS are currently trading SLOOOOWLY, our rate sheets are at the mercy of the gyrations of the yield curve...hence...you received reprices for the worse when fast money sellers emerged!
Meanwhile the S&P has recovered off its lows...although volume is nonexistent, the 1,000 mark appears attainable before close. Trading liquidity is official DRIED UP in the bond market...if your lender didnt reprice for the worse after the first dip lower....BE WARY OF AFTERNOON CHOPPINESS...you might get an unwelcome email in your inbox.
Colonial Story. Not much to say yet...waiting for feedback from FDIC.
Well..I am kinda in the doghouse with the gf...so it might be a good idea for me to call it a day a little earlier than usual. Can I have permission please?
PS If you answer no...I am telling her it was your fault