MBS MID-DAY: Stock Lever Connected
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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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10:40AM :
LPS: Delinquency Rate Up in April. REO Inventory Down.
Lender Processing Services reports the following "first look" at April 2011 month-end mortgage performance statistics derived from its loan-level database of nearly 40 million mortgage loans. Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 7.97% (+2.4% Mom, -16.3% YoY). Number of properties that are 30 or more days past due, but not in foreclosure: 4,204,000.
Number of properties that are 90 or more days delinquent, but not in foreclosure: 1,961,000. Number of properties in foreclosure pre-sale inventory: 2,184,000. States with highest percentage of non-current* loans: FL, NV, MS, NJ, GA. States with the lowest percentage of non-current* loans: MT, WY, AK, SD, ND. Number of properties that are 30 or more days delinquent or in foreclosure: 6,388,000. The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report on May 26, 2011.
10:19AM :
New MBS Commentary Post
10:17AM :
ALERT:
MBS Travel Deeper into Red. Delays and Recalls Possible
"Rate sheet influential" MBS coupons have fallen to new intraday lows as stocks have risen to new intraday highs. This is poor timing as many lock desks are preparing to publish pricing. If you've already seen rate sheets go live, you are danger of seeing them recalled. If your pricing hasn't been updated, you are likely to experience further delays as secondary adjusts rebate to better reflect current MBS indications.
9:12AM :
Stock Lever in Play. MBS Reverse Course. In Red.
The stock lever is connected! Bond prices are moving into the red after starting the session in positive territory. The change of direction was motivated by profit taking as equities ticked up from flat to +0.11%. This reminds us that rates are overbought and very sensitive to profit taking. Losses aren't huge though. 10s are only down 3/32 while FNCL 4.0s are -3/32 at 100-09. If indications were taken down right now, rate sheets would be worse. With the calendar essentially empty until 2pm, we're keeping an eye on stocks for directional guidance.
8:31AM :
ALERT:
Rates Better on Open. Testing a "Duration Ledge"
Rise and Shine. Bond prices are up and benchmark yields are down as stock futures flatten out. If secondary takes down MBS indications right now, rebate would be better on rate sheets. The econ calendar is clear until 2pm when the FOMC Minutes are released. This leaves investors to trade around the gyrations of the stock lever and the Fed's daily QEII coupon pass (2028 to 2041 maturities). If it were our book to manage we'd be looking to take profits as 10s cross over 3.09%. If this spot is broken, resistance is quickly found at 3.07%. This level is a very important because it's where snowball selling picked up momentum in early December 2010 (shot from 3.07 to 3.21%). We'll call it a major "duration ledge". If broken we'd be setting ourselves up for a run toward 3.00% and improved "Best Execution" mortgage rates. On the whole we remain defensive of further gains but the door is definitely open. Stay close. We're in the midst of a potential shift "down in coupon".
8:28AM :
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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Adam Quinones : "lock desks very hesitant to add hedges (MBS sales = pipeline coverage) bc prices could rise further and that would be bad for pull-through. That would increase hedging costs for desks who already locked (added coverage) bc they would have to buy back hedges at more expensive price and would still have to renegotiate new locks with consumers."
Adam Quinones : "MBS trading desks report slow activity in TBAs with a slight pickup in origination sales (hedging) but nothing monumental. "
Adam Quinones : "BAML Economics: There has been growing concern about the health of the US economy, triggered by the drag of high commodity prices on consumer budgets, further pain in an already-sick housing market and a slow healing in the labor market. Digging deeper into the April job flows data reveals a worrisome development:the number of people who transitioned from employed into unemployed (fired) exceeded the number who moved from unemployed to employed (hired), for the first time since November 2009. - "
Ira Selwin : "Have gas prices been mentioned in the unemployment numbers yet?"
Ira Selwin : "Not sure if this was mentioned yesterday, but Wells enhanced their Non-Conforming guidelines a tad"
Victor Burek : "flagstar is .15 worse at 4.625 and below....05 worse 4.75 and above"
Brett Boyke : "AQ those guys are still waiting on my desk, hope to have a reason to call them "
Brett Boyke : "purchases"
Adam Quinones : "old refi folks looking for 4.25?"
Brett Boyke : "we got a late start with the poor weather and people are coming out of the woodwork"
Adam Quinones : "BB how is biz in Chicagoland?"
Adam Quinones : "originators love to hate secondary. when/if I open a shop, we will change that stigma."
Ira Selwin : "Right, so that number is deceiving. Plus I'm sure the weather is a factor."
Matt Hodges : "hasn't put a sale since I've been here - 2 years"
Matt Hodges : "one woman in my office works at Sears"
Matt Hodges : "Ira - many items - Q is right about agents who just keep their license active, plus remember they are SE - write off all of their mileage, etc"
Ira Selwin : "So what else do they do for a living then?"
Adam Quinones : "i bet there are lots of $0.000 earnings in there Ira."
Adam Quinones : "http://www.realtor.org/press_room/news_releases/2011/05/member_profile"
Ira Selwin : "AQ - that realtor income info - that seems way too low, unless I'm missing something?"
Adam Quinones : "http://www.mortgagenewsdaily.com/channels/pipelinepress/05182011-checking-accounts-nar-members.aspx"
Adam Quinones : "Before the financial crisis, the banking industry was too concentrated and clubby. Now, many argue that it is even more so, especially since not only are many banks going out of business, but Chase, Citi, BofA, and Wells are actually becoming larger. And it is not as if the big banks are trying to boost their customer service with lower fees and paying higher rates on checking accounts! Where else are people going to bank?
So why aren't significant numbers of customers and clients moving on to "
Adam Quinones : "NAR released some interesting Realtor profile information. Their median income (half above, half below) declined 4.5% to $34,100 last year, which followed a 3 percent decline in 2009. Members licensed as brokers earned a median of $48,700 in 2010, while sales agents earned $24,900. Per NAR, 16% earned a six-figure income, 14% work less than 20 hours per week, 57% are women. The typical NAR member is 56 years old with only 3% of members being under the age of 30 (22% are 65 or older). NAR had les"
Jeff Anderson : "those are the ones that we did at 4.75-4.875 the first drop."
Jeff Anderson : "exactly"
Jeff Anderson : "A lot of talk about dropping in years again. The 20, 15 and especially the 10 year pricing is more aggressive it seems than the 30 year right now."
Adam Quinones : "they want 4.25% ?"
Jeff Anderson : "I'm all locked right now. Dealing with a bunch of people that were holding off for that extra 1/8th in late fall and then they got caught."
Adam Quinones : "you locking any loans Jeff?"
Adam Quinones : "profit taking strikes again!"
Matt Hodges : "yes"
Ira Selwin : "for them or their borrowers"
Matt Hodges : "overage protection"
Ira Selwin : "wonder why the los would lock all those loans for 60 days still"
Matt Hodges : "supposed 1st day of new comp"
Adam Quinones : "what was April 1 Ira."
Ira Selwin : "Why would they do that?"
Adam Quinones : "yeh. got alot of feedback from desks saying many LOs locked in 60 days on April 1."
Ira Selwin : "relocks from April 1st?"
Adam Quinones : "wonder if theyre relocks from April 1"
Victor Burek : "50/50 here"
Gus Floropoulos : "although my pipeline is 75% purchase loans "
Matthew Graham : "highest refi app reading all year"
Gus Floropoulos : "Aaron, I disagree with that"
Matthew Graham : "MBA saw a lot last week as well"
David Z. : "I am seeing alot of Refis, maybe it just didnt catch on. Alot of term changes."
Aaron Buyside Meyer : "doesn't surprise me everyone refied who could (well most everyone) the only people trying now haven't refied at all in the past 2-3 years and have jobless, equity decline or marginal credit history"
Adam Quinones : "AQ_MND: Still not much origination to speak of into lower rates. CMM heavily traded by hedgers with 1m forward spot so cheap.
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