MBS MID-DAY: 1/28/2011
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MBSonMND: MBS MID-DAY
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Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard
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10:54AM :
ALERT:
Reprices For The Better Are Probable If Current Levels Hold
Check out the most recent MBS Commentary (link below). Bottom line: all that really needs to happen for lenders who priced before 9:30 to reprice for the better would simply be for the market to hold current levels or close to them.
10:19AM :
New MBS Commentary Post
9:56AM :
DATA FLASH: Consumer Sentiment
CONSUMER SENTIMENT FINAL JAN 74.2 (CONSENSUS 73.2) VS PRELIMINARY JAN 72.7 *** CURRENT CONDITIONS INDEX FINAL JAN 81.8 (CONSENSUS 80.0) VS PRELIMIN JAN 79.8 *** CONSUMER EXPECTATIONS INDEX FINAL JAN 69.3 (CONSENSUS 64.5) VS PRELIM JAN 68.2 *** 12-MONTH ECONOMIC OUTLOOK INDEX FINAL JAN 87 VS PRELIMINARY JAN 87 *** 1-YEAR INFLATION OUTLOOK FINAL JAN 3.4 PCT VS PRELIMINARY JAN 3.3 PCT ***5-YEAR INFLATION OUTLOOK FINAL JAN 2.9 PCT VS PRELIMINARY JAN 2.8 PCT ***FINAL JAN CONSUMER EXPECTATIONS INDEX HIGHEST SINCE JUNE ***JAN 12-MONTH ECONOMIC OUTLOOK INDEX REMAINS AT HIGHEST SINCE SEPT 2009 *** 1-YEAR INFLATION OUTLOOK HIGHEST SINCE OCTOBER 2008
9:54AM :
Stocks Open Higher, But Falling, Treasuries Rally
After opening moderately higher, the S&P turned a corner just over 1302. Shortly thereafter, 10yr yields have fallen to nearly the lowest levels of the morning at 3.4134 and FNCL 4.5's have climbed back into the 102's.
9:05AM :
Bonds Potentially Confirming Supportive Bounce
After an initial move weaker on GDP data, 10yr yields held their ground and have clawed back to 3.4232. If they can muster a move any lower from here, especially back under the the 3.42 pivot, it would be a good sign that we're working in the right direction today. FNCL 4.5's haven't done much, having varied only a few ticks since the data, and currently at 101-31.
8:39AM :
Treasury Yields Rise After GDP Data
After the 830am release of Advance GDP, treasury yields moved up sharply. The 10yr note has since moderated from the 3.45's to the high 3.43's. There is critical support overhead in the 3.46's. FNCL 4.5's are down 5 ticks on the day currently at 101-30.
8:33AM :
DATA FLASH: GDP
US ADVANCE Q4 GDP +3.2 PCT (CONSENSUS +3.5 PCT), Q3 +2.6 PCT; FINAL SALES +7.1 PCT (CONS +5.4 PCT), Q3 +0.9 PCT ***US ADVANCE Q4 GDP DEFLATOR +0.3 PCT (CONS +1.5 PCT), Q3 +2.0 PCT ***US Q4 PCE PRICE INDEX +1.8 PCT (CONS +1.8 PCT), Q3 +0.8 PCT; CORE PCE +0.4 PCT (CONS +0.4 PCT), Q3 +0.5 PCT ***US Q4 MARKET-BASED PCE PRICE INDEX +1.9 PCT (Q3 +1.3 PCT), CORE +0.3 PCT (Q3 +1.1 PCT) *** US Q4 BUSINESS INVESTMENT +4.4 PCT (Q3 +10.0 PCT), EQUIPMENT/SOFTWARE +5.8 PCT (Q3 +15.4 PCT) ***US Q4 EXPORTS +8.5 PCT (Q3 +6.8 PCT), IMPORTS -13.6 PCT (Q3 +16.8 PCT) ***US Q4 GDP EX MOTOR VEHICLES +3.6 PCT (Q3 +2.1 PCT) ***YEAR-ON-YEAR PCE PRICE INDEX +1.2 PCT (Q3 +1.4 PCT), CORE PCE +0.8 PCT (Q3 +1.2 PCT) ***BUSINESS INVENTORY CHANGE CUTS 3.7 PERCENTAGE POINTS TO GDP CHANGE *** US 2010 GDP +2.9 PCT, BIGGEST INCREASE SINCE 2005, VS 2009 -2.6 PCT ***FINAL SALES RISE LARGEST SINCE Q2 1984, DURABLE GOODS RISE LARGEST SINCE Q4 2001
8:22AM :
Bond Market Slightly Weaker Overnight. Data Looms
After heading out the domestic door around 3.39, 10yr notes are back up into their 3.42 range which provided resistance following FOMC on Wednesday and was broken bullishly after yesterday's 7yr auction. Even before today's data hits, yields have moved back above this pivot. FNCL 4.5's are more even-keeled at the moment, down only 2 ticks at 102-02.
7:18AM :
New MBS Commentary Post
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard
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Matthew Graham : "I like our chances so far today. working with a safety net too, since prices have mostly moved up today. We're not having to worry about reprices for the worse from any lenders who are out already."
Bert Swyers : "well if the lever is in effect it looks promising, especially for a friday"
Matthew Graham : "know what I mean? Ha! You know... A 1300+ S&P means you're big time! You got the heart. You got the power. You're a dynamo of economic magnificence that would never have anything to do with a headline Sentiment reading that was actually LOWER than the previous month! SCOFF! Such declines are for those lowly 1200 handle stock indexes."
Matthew Graham : "1300 S&P sticker shock and Sentiment data was not bullish enough to make that look affordable"
Matthew Graham : "two things Bert"
Matthew Graham : "S&P backs away from that rapidly and bonds are rallying rapidly"
Matthew Graham : "I know it sounds weird, but I think bonds are a bit scared of that 1300 mark in S&P"
Bert Swyers : "what do you think is prompting the selloff?'"
Matthew Graham : "it's been about the stock sell-off"
Bernie : "i concur matt"
Matthew Graham : "this rally in bonds has not been about consumer sentiment data"
Matthew Graham : "unfortunately, until otherwise demonstrated, I'm kinda feeling the stock lever today"
Matthew Graham : "and seeing it on the uptick in bonds"
Matthew Graham : "we're seeing great volume"
Bert Swyers : "MG do you think we might be able to get the range a little lower say 3:35-3:38"
Matthew Graham : "I mean, even if the market is SIDEWAYS, as long as risks of worsening are low, it USUALLY makes sense to hold out. You'll hopefully find, as I think most others here have that (if you have your deal uploaded and ready to lock), you're so far ahead of your lender(s) that you'll be fine"
Victor Burek : "he is always on the money"
Dustin Burbank : "Makes sense, thanks MG."
Jason York : "Matty G is on the money here"
Matthew Graham : "especially considering that things are trending in a direction that will get you one"
Matthew Graham : "reason being is that you'd have so much advanced notice of a reprice for the worse that it only makes sense to hold out for reprice for the better"
Dustin Burbank : "Deadline is Monday."
Jason York : "if you already have pricing, more then likely they priced at the lows, so you have already taken the losses, so see how the rest of the day goes"
Mike Drews : "if your investor priced early"
Mike Drews : "you're probably owed a .25 at this point"
Matthew Graham : "well Dustin, when the market is doing what it's doing now, we'd never lock immediately"
Victor Burek : "definitely dont lock now"
Dustin Burbank : "Likely locking today and just wondering if afternoon would be better than morning."
Matthew Graham : "barring a reversal of the trend over the last half hour, reprices are highly likely from any lenders who released rates before 9:30"
Dustin Burbank : "What do you think the chances are of reprices today?"
Adam Quinones : "in 2minutes VB"
Victor Burek : "fed buying this AM?"
Bernie : "BOA worse on average 26bps from yesterdays close"
Brett Boyke : "consumer demand goes down if costs are pushed to consumers so companies take it in the shorts and profits will be hurt, you will hear the same thing over and over come Q2 when the commodity/input costs really come home to roost. Cant make it up by getting lean any longer."
Adam Quinones : "...which will suck the life right out of equities "
Matthew Graham : "but BB (said MG in feigned surprise), it seems like a margin squeeze could eat into corporate profits and in some way hamper the ongoing recovery juggernaut?"
Brett Boyke : "amazon disappointment was due to reduced margins, that is the classic example of whom will absorb the cost between companies and consumers."
Adam Quinones : "THE AX IM GRINDING: The great margin squeeze of 2011 is coming for both consumers and producers. For consumers, without wage growth (Beige Book just said its MIA), disposable income shrinks as energy and food costs rise. While hopefully just a temporary jump, this will only serve to sour the mood on Main Street. For producers, profit margins are being pressured because they aren't able to pass along higher input prices to consumers who are already cost conscious bargain hunters. That will only d"
Christopher Max : "what do you mean by the margin squeeze is on?"
Matthew Graham : "Anything that the 10yr yield does today under 3.47 is highly boring. The sad part about that is that it also means anything over 3.3ish is boring as well"
Matthew Graham : "Get that guy to the clinic! Range exhaustion claims another victim"
Adam Quinones : "the uncertainty argument is not"
Robert Rippy : "I am learning this "range bound" thing can cause depression"
Adam Quinones : "the fundamental argument is skewed in our favor for sure"
Robert Rippy : "OK, so GDP was below expectations and below what they say it should be quarter after quarter to bring down the unemployment numbers and the 10 yr goes to -13?"