MBS LUNCH: Retracing Gains. Possible Reprice Alert
Prices of "rate sheet influential" MBS coupons are feeling the effects of parnertia as benchmark TSYs sell off. The FN 4.5 is currently approaching the "reprice the worse zone" as prices are now 8 ticks (0-08) off morning highs.
Although there is no reason for all out panic as this is an expected retracement of yesterday's rally, there are signs of weakness in the fixed income market as trader's return prices to high volume price points...if your closing time frame is short and have been floating overnight...we would strongly consider taking any gains (ha..funny) before aggressive lenders reprice for the worse.
Weakness but no reason to panic yet....
Growing concerns of more weakness ahead: Bargain buyers not taking advantage of cheaper price yet. Cheaper prices illustrated by trade prices falling under Volume Weighted Average Price. Waiting to see where/if bottom fishers step in...watching the stock lever for guidance.