MBS MID-DAY: Recovering from Tapebomb

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MBSonMND: MBS MID-DAY
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FNMA 3.5
94-08 : +0-01
FNMA 4.0
98-17 : +0-02
FNMA 4.5
101-31 : +0-03
FNMA 5.0
104-25 : +0-03
GNMA 3.5
95-18 : +0-04
GNMA 4.0
100-07 : +0-02
GNMA 4.5
103-18 : +0-03
GNMA 5.0
106-12 : +0-02
FHLMC 3.5
94-02 : +0-01
FHLMC 4.0
98-11 : +0-02
FHLMC 4.5
101-26 : +0-03
FHLMC 5.0
104-20 : +0-03
Pricing as of 11:01 AM EST
Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard .
10:51AM  :  Highlights From Fed's Fisher and Lockhart
FED'S FISHER - US HAS INFLATIONARY FORCES WORKING ON IT DESPITE HIGH UNEMPLOYMENT *FISHER - JAPAN DISASTERS A SHORT TO MEDIUM TERM "DISTRACTION" FOR U.S. ECONOMY, NOT LIKELY A LASTING NEGATIVE IMPACT * FED'S LOCKHART - LOOKS LIKE Q1 GROWTH WILL COME IN SOFT RELATIVE TO WHAT WAS EXPECTED * LOCKHART - HIGHER OIL PRICES HAVE DAMPENED CONSUMER ACTIVITY, A CONCERN * LOCKHART - WOULDN'T BE SURPRISED TO SEE ELEVATED OIL PRICES FOR SOME TIME * LOCKHART - ECONOMY APPEARS TO BE ABSORBING HIGHER COSTS OF OIL WITHOUT SEVERE REACTION * LOCKHART - AT OIL PRICES OF $150 HIGHER, COULD HAVE A RECESSIONARY EFFECT * FISHER - HIGHER OIL PRICES COULD HAVE INFLATIONARY EFFECT AS WELL
10:46AM  :  MBS Outperforming Benchmarks
FNCL 4.5's are not 1 tick up on the day at 101-29. The ongoing moderation of MBS prices should alleviate any risks of reprices for the worse, as well as improve how rates come out this morning relative to where they otherwise might. 10yr notes are coming down for their 3rd test of 3.417 at the moment, a level that has provided resistance so far this morning.
10:17AM  :  Citi's Earnings Dampened by Mortgage Business
(NYTIMES) -Two years after being on the verge of collapse, Citigroup squeezed out a $3 billion profit as it contended with a series of mortgage troubles and sluggish economic growth across the globe. While Citigroup topped analysts’ consensus estimates by a penny with earnings of 10 cents a share, its earnings fell 32 percent from the period a year earlier, when Citi reported earnings of 15 cents a share, or $4.4 billion. Citigroup’s earnings were dampened by the same factors that weighed on the results of Bank of America and JPMorgan Chase last week. Despite the solid performance of the Wall Street businesses and improvement in credit quality, its traditional banking businesses have been hit by foreclosure troubles, new financial regulations and a slowdown in home loan growth. Wells Fargo and several big regional players are expected to report similar challenges when they announce their results later this week. Citi’s results were buoyed by the release of $3.3 billion of reserves that had previously been set aside to cover credit card and other loan losses. The move helped offset deeper losses in its domestic mortgage unit and weaker trading and investment banking results.
10:00AM  :  US homebuilder sentiment slips in April
WASHINGTON, April 18 (Reuters) - U.S. homebuilder sentiment slipped a notch in April as home prices continued to fall in most areas of the country amid widespread foreclosures, a survey released on Monday showed. The National Association of Home Builders/Wells Fargo Housing Market index fell to 16 from 17, leaving the index in the pessimist range for a full five years. A reading above 50 indicates that more builders view sales conditions as good than poor. The index has not been above 50 since April 2006. "The spring home buying season is getting off to a slow start due to persistent concerns about home values as more foreclosures seem to be hitting the market, increasingly restrictive lending requirements for home buyers and builders, and the slow pace of economic recovery," said David Crowe, the NAHB's chief economist. (Reporting Corbett B. Daly; Editing by Chizu Nomiyama)
9:44AM  :  MBS, TSY's Bleeding Stopped for Now
After hitting a price of 101-21, FNCL 4.5 MBS have moderated to 101-28 as the knee-jerk down-swing wears off. 10yr benchmarks touched the mid 3.45's and have also moderated to 3.434. However, this is not a guarantee that the moderation will continue. Unfortunately, 10's stopped to bounce at 3.42 both on the way higher and during the moderation, letting us know this technical level is still in play. In fact, 3.42 marked a bounce as yields recovered, so it is one of the better resistance targets for now. S&P's bounced at 1299.50 just after the open.
9:15AM  :  ALERT: MBS Fall on S&P News. Reprices or Weaker Rate Sheets Ahead.
If you had rates already before the S&P news hit just after 9am, expect reprices for the worse as FNCL 4.5's are down just over 10 ticks peak to trough, currently at 101-22. 10yr notes are up to 3.445 and have still been a moving target as more and more "snippets" are released. If you don't have rates yet today, rate sheets should be weaker than Friday afternoon's offering. It's not yet clear how this news will ultimately affect where markets will be later today.
9:05AM  :  ALERT: S&P Revises US Outlook To Negative
Today 09:03 - S&P AFFIRMS RTGS ON UNITED STATES; OUTLOOK REVISED TO NEGATIVE - Treasury yields moved sharply higher on the downgrade relative to the morning's action. 10's are currently a moving target around 3.413.
8:39AM  :  TSYs Extend Rally Overnight, MBS Open Slightly Improved
Stock futures and TSY yields fell in the Asian and European sessions, bringing the 10yr yield as low as 3.367. It then rose to 3.387, where it seems to have met slight resistance, moderating down to 3.38. MBS opened slightly stronger with FNCL 4.5's up 2 ticks currently at 101-30. Markets have done little by way of response to what is arguably the most prominent domestic headline: CITI Earnings. Earnings per share came in at 10 cents vs a 9 cents estimate. Q1 revenue was down 22% to $19.7 bln vs estimates of $20.55 bln. The lone data item on the economic calendar comes in the form of NAHB's Housing Market Index today at 10am.
7:29AM  :  New MBS Commentary Post

Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard .
Andrew Horowitz  :  "perhaps Bill Gross"
Andrew Russell  :  "you are saying the US is on the take AH, naaaaaaaa"
Andrew Horowitz  :  "AR conspiracy theorist wonders if someone influenced S & P"
Andrew Russell  :  "AH, Inside Job corroborates your point 100%"
Andrew Horowitz  :  "None of the 3 ratings agencies have much credibility in my book after the financial crisis"
Adam Quinones  :  "short base battling back!"
Adam Quinones  :  "curve steepened significantly too."
Matthew Graham  :  "largest hour of 10yr futures volume since 3/16 Japan-related sell-off"
Andrew Horowitz  :  "based on the interview of the rep from S & P right now on CNBC, this does sound like it is a political move on behalf of S & P to get the two parties and the president to act"
Matthew Graham  :  "Today 06:50 - WHITE HOUSE ECONOMIST GOOLSBEE SAYS BELIEVES U.S. WILL BE ABLE TO ACHIEVE LONG-TERM DEFICIT REDUCTION -MSNBC Today 06:51 - GOOLSBEE SAYS SHOULD NOT MAKE TOO MUCH OUT OF S&P ACTION ON U.S. OUTLOOK -MSNBC Today 06:57 - GOOLSBEE SAYS U.S. WILL RAISE DEBT CEILING, SHOULD NOT OVERREACT TO S&P OUTLOOK CHANGE -CNBC Today 07:00 - GOOLSBEE SAYS S&P IS MAKING A POLITICAL JUDGEMENT WHICH WHITE HOUSE DOES NOT AGREE WITH-CNBC "
Edgar  :  "If the US loses its AAA rating 2012 will be the end of the world. You will see a massive liquidation of US debt as investor funds that only own AAA paper will be forced to sell, and we're not talking a few billion....we're talking trillions in liquidations. I hope this is a wake up call to both democrats and republicans. Problem for the US economy is if they do what they need to do (cut massively, raise taxes) then the economy sinks, if they don't do what they need to do then the government "
Rob Clark  :  "Guess the government does not know how to pay off the rating agencies like wall street did"
Matthew Graham  :  "ha! guess someone agrees: Today 06:25 - U.S. TREASURY'S MILLER SAYS S&P NEGATIVE OUTLOOK UNDERESTIMATES ABILITY OF U.S. LEADERS TO COME TOGETHER TO DEAL WITH U.S. FISCAL CHALLENGES "
Matthew Graham  :  "i'm surprised the market hasn't written the whole thing off as predicated on politicians making a deal"
Adam Quinones  :  "on the bright side: 09:20 18Apr11 RTRS-CITIGROUP CFO GERSPACH SAYS BANK MAY NEED TO HIRE ADDITIONAL 500 PEOPLE AS A RESULT OF OCC FORECLOSURE SETTLEMENT REQUIREMENTS "
Adam Quinones  :  "yeh id say it was a tapebomb!"
Aaron Buyside Meyer  :  "Did this outlook to negative surprise the traders?"
Matthew Graham  :  "S&P SAYS OUTLOOK REFLECTS VIEW OF THE INCREASED RISK POLITICAL NEGOTIATIONS OVER THE MEDIUM- AND LONG-TERM FISCAL CHALLENGES WILL PERSIST UNTIL AT LEAST AFTER NATIONAL ELECTIONS IN 2012 "
Jill Statz  :  "FAMC just annouced that they were lowing there minimum credit score to 620 for FHA/VA"
Matthew Graham  :  " S&P SAYS NEGATIVE OUTLOOK SIGNALS THERE IS AT LEAST A ONE-IN-THREE LIKELIHOOD THAT IT COULD LOWER ITS LONG-TERM RATING ON THE U.S. WITHIN TWO YEARS "
Matthew Graham  :  "S&P SAYS WE SEE THE PATH TO AGREEMENT AS CHALLENGING BECAUSE THE GAP BETWEEN THE REPUBLICAN AND DEMOCRATIC PARTIES REMAINS WIDE "
Matthew Graham  :  " S&P SAYS MORE THAN TWO YEARS AFTER THE BEGINNING OF THE RECENT CRISIS, U.S. POLICYMAKERS HAVE STILL NOT AGREED ON HOW TO REVERSE RECENT FISCAL DETERIORATION OR ADDRESS LONGER-TERM FISCAL PRESSURES "
Matthew Graham  :  "S&P SAYS IF AN AGREEMENT NOT REACHED AND MEANINGFUL IMPLEMENTATION IS NOT BEGUN BY THEN, THIS WOULD IN OUR VIEW RENDER THE U.S. FISCAL PROFILE MEANINGFULLY WEAKER THAN THAT OF PEER 'AAA' SOVEREIGNS "
Matthew Graham  :  "S&P SAYS PATH TO ADDRESSING BUDGET DEFICITS AND RISING GOVERNMENT INDEBTEDNESS IS NOT CLEAR "
Matthew Graham  :  " S&P SAYS IT BELIEVES THERE IS A MATERIAL RISK THAT U.S. POLICYMAKERS MIGHT NOT REACH AN AGREEMENT ON HOW TO ADDRESS MEDIUM- AND LONG-TERM BUDGETARY CHALLENGES BY 2013 "
Adam Quinones  :  "09:01 18Apr11 DJN-DJ CITI CFO EXPECTS $25M-$30M A YEAR IN HIGHER MORTGAGE SERVICING COSTS 09:02 18Apr11 DJN-DJ CITI CFO EXPECTS $40M-$50M IN ONE-TIME CHARGES AFTER CONSENT ORDER "
Matthew Graham  :  "CITIGROUP CFO GERSPACH SAYS BANK WILL RECORD ONE-TIME CHARGES OF $45 MLN TO $50 MLN DUE TO OCC SETTLEMENT OVER "NEXT FEW QUARTERS" "
Matthew Graham  :  "CITIGROUP CFO GERSPACH SAYS BANK WILL INCUR $25 MLN TO $30 MLN IN ANNUAL COSTS RELATED TO CHANGES MANDATED UNDER OCC FORECLOSURE SETTLEMENT "
Matthew Graham  :  "CITIGROUP CFO GERSPACH: WE IDENTIFIED IMPROVEMENTS NEEDED IN FORECLOSURE PROCESS IN 2009 AND HAVE BEEN WORKING AT IT SINCE 4Q2009 "
Adam Quinones  :  " RTRS-CITIGROUP CFO GERSPACH: WITH FANNIE AND FREDDIE, WE CONTINUE TO LOOK AT THE NEED TO BUILD REPURCHASE RESERVES FOR WHOLESALE LOANS "
Adam Quinones  :  "FROM THE WEEK AHEAD: The coming days offer little in the way of macroeconomic data, but the sparsely populated calendar does hold new stats on the housing markets. "Housing will dominate the news in the upcoming week," said economists at IHS Global Insight. "February's housing numbers were deplorable, but they were probably dragged down by special factors such as weather and building code changes. March will bring better numbers, but the improvement will be payback, not the long anticipated pic"