MBS MID-DAY: 9/23/2011
By:
Matthew Graham
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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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9:32AM :
ALERT:
MBS Sharply Lower, but Rate Sheets May Not Follow
Bond Markets are weaker this morning and with tons of volatility between MBS and Treasuries. As far as the weakness in general, equities futures were able to bounce just before breaking long term support. Everyone's a bit jumpy when things move as much as they have over the past few days. No one wants to be on the wrong side of a trade if a big snap-back materializes.
That makes for some volatility, and indeed we're seeing that this morning with MBS down 20 ticks and back up 8 or 9 in the space of an hour. Our new sweetheart 3.5's are 8 ticks down on the day at 103-13, but don't pay much attention to the levels. Things are choppy and thinly traded. There's word that a big seller of MBS swept through the market earlier as well. Big Sellers + no volume otherwise = Big movement.
All that being said, this morning's weakness is NOTHING. 10yr yields are up 2 bps to 1.73. Fannie 3.5's are at 103-11 versus the previous "concrete ceiling" level of 101-25! A bit of pullback is OK, and lenders shouldn't ding ya too hard because of it.
That makes for some volatility, and indeed we're seeing that this morning with MBS down 20 ticks and back up 8 or 9 in the space of an hour. Our new sweetheart 3.5's are 8 ticks down on the day at 103-13, but don't pay much attention to the levels. Things are choppy and thinly traded. There's word that a big seller of MBS swept through the market earlier as well. Big Sellers + no volume otherwise = Big movement.
All that being said, this morning's weakness is NOTHING. 10yr yields are up 2 bps to 1.73. Fannie 3.5's are at 103-11 versus the previous "concrete ceiling" level of 101-25! A bit of pullback is OK, and lenders shouldn't ding ya too hard because of it.
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard
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Oliver S. Orlicki : "pfg pricing actually improved from yesterday"
Steven Stone : "amen MG"
Matthew Graham : "although targeted to consumers, you guys should give an occasional glance at ratewatch, where I've been saying the following for the past few days: FHA/VA deals are in a bit of a predicament that's keeping them blocked off below 3.75% (there's no secondary market for rates any lower than that right now!). For similar reasons, 15 year fixed conventional loans may be stuck at 3.25%."
Matthew Graham : "15's would need 2.5 coupons to get more liquid before moving down much"
Matthew Graham : "3.25 is the limit to go into the prevalent 3.0 coupon"
Matthew Graham : "15 yr was already close to stonewalled before the rally"
Joe Ridings : "15 yr isnt at all much improved. Matt, do you know why?"
Sam Baugh : "anybody else noticing 15 year pricing isn't much impoved this week despite big gains?"
John Rodgers : "at 7 am I read the "Week Coming to an End" blog and the first word of the first sentance is what you should take for today. Matt nailed it."
John Rodgers : "VA / FHA 30 yr shold be paying over 2 at 3.5% and its not even on the rate sheet"
Daniel Kramer : "citi's pricing only .30 worse"
Jason York : "guys looks at the past 2 days, you have to expect some pull back, don't panic too much"
Mike Drews : "you guys are doing the same thing as Chase!"
Kunal Khanna : "Yeah Oliver I'm thinking the same too..."
Oliver S. Orlicki : "is today going to get ugly? Should I be locking up what I can"
Matthew Graham : "simple as this IMO: everyone's pulling back because they observe everyone else pulling back... buyer's remorse. chase was biggest "buyer" (in the sense of committing the most on rate sheets) so now they're the biggest seller this AM."
Andrew Horowitz : "or both ;-)"
Ira Selwin : "Or got too much volume"
Andrew Horowitz : "sounds like somebody might have made a mistake in previous pricing model"
Mike Drews : "they were the leader, yes"
Matthew Graham : "chase was leading the pack, no?"
Mike Drews : "Chase about .7 worse this morning"
Matthew Graham : "RTRS- TRADERS CITE TALK OF FURTHER SUPPORTIVE MEASURES FROM ECB BEHIND BOND, EURO TURNAROUND "
Andy Pada : "fannie mae cash window about 30 bps worse"
Matthew Graham : "at this point, MBS just drifting lower to keep pace with the curve, might even see some tightening"
John M Roberts - TN Consumer : "I seem to remember comments about weekend before "month-end/quarter-end" and a fresh round of Treasury auctions which should be yet-again at all time lows (last live update post) - seems as likely as "exhaustion" - no buyers as traders evaluate going into next week?"
Matthew Graham : "combine that with what can best be described as "buyer's remorse" and we're easily in the red vs TSYs"
Matthew Graham : "look at how (IN)frequently MBS are flashing compared to TSY's this morning"
Matthew Graham : "simple matter of exhaustion in MBS"
Matthew Graham : "I remember hearing answers like I'm about to give and not being satisfied... thinking "there must be more to it than that""
Oliver S. Orlicki : "what caused the drop?"