MBS OPEN: Sleepy Start to Session

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Good Morning.Happy Monday

Recap of Last Week...

  • New Residential Construction Spending +4.4%, Commercial Building -3.7%. READ MORE
  • Pending Home Sales move higher for 9th consecutive month. READ MORE
  • Loan apps improve in holiday shortened work week. READ MORE
  • FHA to increase minimum FICOs,  reduce seller concessions, increase premiums, down payments. READ MORE
  • Addressing the Root Cause of the Housing Crisis. READ MORE
  • Warehouse Lending is Profitable for Community Banks. READ MORE
  • Wholesale Lending Not Dead, Originators Adapt to New Environment. READ MORE
  • How Did the Jobs Report Affect Mortgage Rates.  READ MORE
  • AmTrust NO LONGER TAKING LOCKS. READ MORE
  • Fed MBS Purchases Support Lenders. Bernanke Hints at Program's Extension. READ MORE

After moving outside the range in holiday trading conditions in the week before, rates backed-up in a hurry last week as traders took profits, unwound Dubai induced flight to safety allocations, prepped positions for the release of Non-Farm payrolls data, and set up for this week's round of 3s/10s/30s. Following the release of BLS data on Friday morning, rates kept on rising before eventually finding support at the outer confines of the range at 3.50%.

The FN 4.0 went out the door on Friday -0-14 at 98-26 yielding 4.124%. The FN 4.5 ended the session -0-09 at 101-17 yielding 4.313%. The current coupon moved up to 4.219% at "going out" marks on Friday, up almost 25bps from the prior week, and rate sheet rebate was notably worse...pushing par 30 year fixed mortgage rates back up to 4.75 (at best).

Here is a week over week FN 4.5 chart...

For more on last week read and the outlook ahead read MBS AFTERNOON : PLAY THE RANGE INTO YEAR END and MBS CLOSE: ERASING A MONTH OF GAINS

So Far this AM...

  • SHANGHAI +0.45%, HANG SENG -0.77%, TOPIX +1.05%, NIKKEI +1.45%, CAC -0.23%, DAX -0.44%, FTSE -0.36%

So far the FN 4.0 is +0-06 at 99-00 yielding 4.106% and the FN 4.5 is +0-04 at 101-21 yielding 4.298%. The secondary market current coupon is 4.202%. The CC yield is +73bps/10yr TSY and the CC is +58bps/10yr swap rate.

Its cold and its a Monday morning...trading flows have been minimal.

Below is a FN 4.5 two day. We have almost recovered from Friday's meltdown.

It's all about TSY supply this week. READ MND'S THE WEEK AHEAD