MBS OPEN: Rates Higher. Price Action Choppy
In the week that was, mortgages traded in a narrowing range as 10yr TSY notes bounced back and forth between positional resistance and support. While the range bound behavior of our benchmarks contained MBS price directionality, lock desks were busy as originators took profits on peaking MBS prices and consumers pulled the trigger on six month low mortgage rates
Last week the market was, for the most part, stuck in wait and see mode. While this week's schedule is jammed packed with data, auctions, and month end events, one has to wonder how the absent minds of thankful market participants will react to the confluence of data and events that fill the economic calendar this week. That said, the extent to which we are able to place indicative values on reactive price action may be limited as a holiday influenced lack of liquidity governs directional momentum.
Regardless of expected seasonal slowness and an anticipated "lack of liquidity", we do not overlook the broader themes moderating economic outlooks and media perceptions. More recently, as balance sheets begin to be prepped for window dressing, fears of "worse to come" have re-emerged...with weakness in housing leading the way for double dippers. The week ahead offers up much to discuss in terms of the BIG PICTURE perspective, especially in terms of the health of housing....
- Existing Home Sales
- S&P/Case Shiller
- FHFA Home Price Index
- New Home Sales
Big picture perspectives aside, remember how a lack of liquidity can affect price action...it creates CHOPATILITY.
The FN 4.0 is -0-02 at 99-10 and the FN 4.5 is -0-03 at 101-23. Its already been a volatile morning for "rate sheet influential" MBS prices...
FIRST EVENT OF THE WEEK: EXISTING HOME SALES AT 10AM
Ahead of the data...3.37% support has been broken in 10s and rates are higher.