MBS ALERT: New Intraday Low Hit as Yield Curve Steepens

Mortgages are finding it difficult to maintain support as the 10yr tests the all important 3.27% pivot point.

The long end of the yield curve is taking a beating today. Illustrating this is the steeper 2s/10s curve, which is noticeably weaker after failing to break through 252bps resistance.

In the secondary mortgage market, as prices began to fall, originators started selling more and more loans...we've seen almost 9,000 trades today with nearly $3 billion in new loan supply hitting bid lists, most of which has been offered this afternoon.  Bad timing for MBS supply as prices were already plummeting.

The FN 4.5 just hit another intraday low print at 102-07....

The FN 4.0 is -0-14 at 100-01 yielding 4.004% and the FN 4.5 is -0-14 at 102-07 yielding 4.229%. The secondary market current coupon is 4.004%. Illustrating the effect of added supply at a bad time, into the sell off, is the fact that "rate sheet influential" MBS yield spreads have gapped out a few basis points. The CC yield is now +74bps/10yr TSY yield and +62bps/10yr swap rate.

If your lender has not repriced for the worse yet, and have resisted baking a few extra bps into rate sheets, then reprices for the worse are more likely.