MBS MID-DAY: Reprices For The Better Reported

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MBSonMND: MBS MID-DAY
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FNMA 3.5
95-31 : +0-03
FNMA 4.0
100-05 : +0-04
FNMA 4.5
103-14 : +0-04
FNMA 5.0
106-02 : +0-03
GNMA 3.5
97-14 : +0-03
GNMA 4.0
102-00 : +0-04
GNMA 4.5
105-10 : +0-04
GNMA 5.0
107-32 : +0-03
FHLMC 3.5
95-26 : +0-03
FHLMC 4.0
100-02 : +0-04
FHLMC 4.5
103-10 : +0-03
FHLMC 5.0
105-31 : +0-03
Pricing as of 11:00 AM EST
Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard .
10:59AM  :  ALERT: Stocks Remain Under Pressure, Positive Reprices!
Reprices for the better have been reported as persistently weak stocks continue to allow for bond yields near the days best levels. For MBS, that's 4 ticks better in FNCL 4.5's at 103-14 and in 10's, 2 bps better at 3.1525. The first reprice seen was indeed from one of the previously mentioned lenders who priced at just the wrong time this morning. Similar lenders may follow and even other lenders are possible given that we have held gains in a relatively stable fashion. The warning is that the strength so far today is very dependent on weak stocks. If they muster some sort of epic turn-around, we could be talking about the other kind of reprices later today.
10:04AM  :  TSYs and MBS at Best Levels as Stocks Fall Early
After going out at 1342.60 last night S&P's are down to 1334.16 in the first half hour of open trading. That steep slide has been of great benefit to bond markets on this data-less day as 10yr yields are down to their lows at 3.152 and FNCL 4.5's are up 3 ticks on the day now at 103-13. For lenders who priced when 4.5's were around 103-10, we'll need to see another few ticks or an extended time frame holding 103-10 or better. Possibilities of reprices also rely a bit on how aggressive morning rates were. Several lenders priced on a downswing in MBS prices and thus may have been slightly more conservative than they otherwise might have been. If that conservative vibe is missing, then 103-13 is probably not enough for a reprice for the better, though even with a tick or two gain that's held in a stable fashion, it could happen.
9:40AM  :  Fed's Dudley: No Magic Wand to Lower US Gas Prices
FISHKILL, NY, May 20 (Reuters) - The recent rise in gasoline prices is driven by unrest in the Middle East and is therefore not something the Federal Reserve is in a position to tackle, a top Federal Reserve official said on Thursday. "We don't have a magic wand, unfortunately," New York Federal Reserve Bank President William Dudley told a meeting in Fishkill, New York in response to an audience question. Dudley said it was hard to get a read on the recent drop in commodity prices, but added he hoped it would persist. (Reporting by Kristina Cooke; Editing by James Dalgleish)
9:35AM  :  Bond Markets Vacillate Rapidly in Tight Range
Only an hour and change into the domestic session and the characteristic volatility of an options expiration Friday is evident. The first miniature whipsaw of volatility has already worked it's way through 10 yr notes and MBS as both opened stronger, changed quickly weaker and are now close to breakeven on the day. For FNCL 4.5's that currently looks like two ticks lower at 103-09 and 10yr notes are half a bp higher at 3.1783. The theme of the day is the triangle in stock markets. Both short term and intermediate term charts have trends that are clearly converging in an exceedingly linear fashion. There's more "room" for a downside break (meaning that the longer term triangle would not be broken if the short term triangle breaks to the downside whereas the top line is shared by both). The direction that stocks break from today's triangle stands a reasonable (though not guaranteed) chance of pulling bond yields in the same direction via the stock lever. Unless and until that happens, we're just in a sideways slide this morning, albeit with higher than normal volatility.
8:42AM  :  Stock Lever Engaged Overnight. MBS Slightly Improved
S&P futures are currently off about 3 points versus yesterday's close. They rose briefly last night, but fell about 8 points between 4:30 and 7:30am. During that time, 10yr yields hooked up with stocks with a high amount of correlation. 10's fell as stocks fell, but only to the tune of a few bps. They're coming into the day about a bp and a half lower at 3.1562. FNCL 4.5's are up 3 ticks so far today at 103-13. If the green theme holds this morning, it should allow lenders to come out with slightly better rates than the latest offerings from yesterday. There's no econ data on tap for today and overnight volume was underwhelming.
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard .
Matthew Graham  :  "Hence the recent rates rally this AM"
Matthew Graham  :  ""The theme of the day is the triangle in stock markets. Both short term and intermediate term charts have trends that are clearly converging in an exceedingly linear fashion. There's more "room" for a downside break (meaning that the longer term triangle would not be broken if the short term triangle breaks to the downside whereas the top line is shared by both). The direction that stocks break from today's triangle stands a reasonable (though not guaranteed) chance of pulling bond yields in the"
Matthew Graham  :  "as expected, triangle mentioned broke to the downside"
Matthew Graham  :  "S&P's retesting 1333 lows"
Andrew Horowitz  :  "one last thing to add, i think you said your settlement is not until Sept 1, provided the world is still here, why not check with your bank and see if they will offer you a floatdown option"
Victor Burek  :  "well said mg"
Gus Floropoulos  :  "mg, THAT BIT OF INFO IS BEING CUT, PASTED, AND SENT TO ALL MY CLIENTS!!! THANKS BUD!"
Andrew Horowitz  :  "Jeremy if you have not already figured this out, Matt is a very smart fellow, his advice is priceless"
Matthew Graham  :  "Jeremy... just another 2 cents from my perspective... if you click on the 10yr TSY (not that mortgage rates are tied exactly to TSYs but it's a more stable benchmark of the general bond market's direction) and click out to the maximum view, you may see that yields have only crossed 3.10's to the downside one time since the initial financial crisis. That means one of two things... Either it's going to cross again, or it's not. Brilliant, right? So you can either assume it's not going to cros"
Victor Burek  :  "better to lock when you should have floated then it is to float when you should have locked"
Victor Burek  :  "the main question to ask yourself about floating...what would bother you the most, locking and rates improve or floating and rates rise"
Victor Burek  :  "we are very close to the best rates we have seen this year...the best rate sheets were on tuesday of this week"
Jeremy O  :  "Do you think a reprice today/Monday would be the near-term floor? Seems like we still have a while before things stabilize."
Victor Burek  :  "flagstar is .1 better then yesterdays reprice"
Matt Hodges  :  "if a borrower is using corporate funds - I need letter from CPA stating that the business will be unaffected by the drawdown, correct?"
Victor Burek  :  "maybe lender overlay....if app. value is 200k but they listed for 180k and it didnt sell...they are going to use the lower value"
Matt Hodges  :  "is that new, vic? last one i did was about a year ago and that rule didn't exist"
Victor Burek  :  "lender will limit value to last list price"
Robert Rippy  :  "Can you do a rate/term refinance one day off of the MLS?"
Ira Selwin  :  "https://www.efanniemae.com/sf/refmaterials/loanlimits/"
Thomas Quann  :  "Does anyone have a link that shopws the expiration of the CONF HB in Sept. ? GM by the way...."