MBS RECAP: 10/11/2011
By:
Matthew Graham
•
MBSonMND: MBS RECAP
| Open MBSonMND Dashboard | ||||||||||||||
|
|
|
||||||||||||
| Pricing as of 4:01 PM EST | ||||||||||||||
Afternoon Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard
.
3:56PM :
Can MBS Keep Fighting The Good Fight Tomorrow?
Quite a supportive day for MBS.... Down only 2-3 ticks at the moment as opposed to 10yr notes down 24 ticks in price (5 yr notes now 9 ticks even).
Once again, tomorrow doesn't hold any big ticket items in terms of morning economic data, but the afternoon is much more robust with both a 10yr Treasury Auction at 1pm and FOMC minutes from the 9/20-9/21 announcement at 2pm. Fed-Speak is interspersed with Fisher at 1:20pm, Plosser at 1:30pm, and Pianalto at 2:15pm.
Since there's no econ data forecasts to discuss for tomorrow, the following link looks at the recent breakout of what has been an incredibly long-lived and well-behaved trend channel in 10yr yields, as well as the potential effects on MBS, and counterpoints potentially being offered by stocks. Lots of charts of the changes. Leave a comment and let us know what you think of the markets and what you're doing with your pipelines.
Once again, tomorrow doesn't hold any big ticket items in terms of morning economic data, but the afternoon is much more robust with both a 10yr Treasury Auction at 1pm and FOMC minutes from the 9/20-9/21 announcement at 2pm. Fed-Speak is interspersed with Fisher at 1:20pm, Plosser at 1:30pm, and Pianalto at 2:15pm.
Since there's no econ data forecasts to discuss for tomorrow, the following link looks at the recent breakout of what has been an incredibly long-lived and well-behaved trend channel in 10yr yields, as well as the potential effects on MBS, and counterpoints potentially being offered by stocks. Lots of charts of the changes. Leave a comment and let us know what you think of the markets and what you're doing with your pipelines.
2:15PM :
Risk-Appetite Decreased Among Dealer Accounts - Fed
(Reuters) - Big firms that handle financing for securities and derivatives markets said there was little change in credit terms being offered in the June-August period but noted that came after a lengthy period of easing.
At the same time, they reported in a survey that clients' willingness to take on risks "had decreased somewhat, on net, over the past three months."
The survey covered 21 firms that handle nearly all the dealer financing of dollar-denominated securities and that are the most active intermediaries in over-the-counter derivatives markets. (Reporting by Glenn Somerville, Editing by Chizu Nomiyama)
At the same time, they reported in a survey that clients' willingness to take on risks "had decreased somewhat, on net, over the past three months."
The survey covered 21 firms that handle nearly all the dealer financing of dollar-denominated securities and that are the most active intermediaries in over-the-counter derivatives markets. (Reporting by Glenn Somerville, Editing by Chizu Nomiyama)
11:34AM :
ALERT:
Potential Positive Reprices as MBS Outperform
MBS pricing has improved enough from this morning's levels that some of the characteristically early-to-act lenders could be considering an improvement to rate sheets if current MBS levels hold or are improved upon.
Supply is light enough, spreads had been wide enough, and bid-side demand high enough that MBS could be gaining even without Fed participation. Fannie 3.5's and 4.0's are each up 4 ticks on the day at 101-10 and 103-21 respectively.
10yr yr notes are up 8 bps in yield at 2.158. There's also still the matter of the 1pm 3yr note auction to contend with. Apart from the fact that we've only seen enough gains for perhaps a small minority of lenders to reprice, the uncertainty of the Treasury auction could suggest another iota or two of hesitation to reprice.
Supply is light enough, spreads had been wide enough, and bid-side demand high enough that MBS could be gaining even without Fed participation. Fannie 3.5's and 4.0's are each up 4 ticks on the day at 101-10 and 103-21 respectively.
10yr yr notes are up 8 bps in yield at 2.158. There's also still the matter of the 1pm 3yr note auction to contend with. Apart from the fact that we've only seen enough gains for perhaps a small minority of lenders to reprice, the uncertainty of the Treasury auction could suggest another iota or two of hesitation to reprice.
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard
.
Ira Selwin : "FAMC price change"
Jeff Anderson : "Is everyone sitting down? GMAC reprice....for the better. Not a ton, but I'll take it."
Frank Ceizyk : "but that is simply justifying that fact that no one has a clue about how to stop declining values"
Andrew Horowitz : " program will benefit those that would like to refinance their homes that are in negative equity positions. The true benefit to the deal is that if they are paying now and are at 130% "
Matthew Graham : "making your rates higher than they would be right now"
Matthew Graham : "volatility in MBS is a big downside"
Brent Borcherding : "Uh, DZ..."little if any downside"??? To you maybe, but this is going to be sponsored (Paid for) by the gov't and new banks will take on new risk..."
Frank Ceizyk : "better than nothing will only kick the can down the road"
David Z. : "It's better than nothing and can still be significant. and with little if any downside"
Frank Ceizyk : "exactly-that is why low rates by themselves won't help/haven't improved housing or the economy"
Steve Chizmadia : "Rainy day savings typically become discretionary income when the public has a greater confidence in the future of the economy"
Brent Borcherding : "People have shifted their mindset, Frank, I believe paying off debt and going into rainy day...it's not going direclty into the economy as it would have 5 years ago."
Brent Borcherding : "People are still paying off debt. Montly savings goes to other debt servicing, not just mortgages anymore. Those that are fiscally responsible are keeping same payment and moving to short terms...blanket characterizations, I know, but we've been refi'ing clients lower for 3 solid years now...when will it start working as an improver of the economy?"
Scott Valins : "so cutting LOs out but it will be ~50 bps higher than market rates so people that qualify will still go the way of normal refi?"
Jeff Anderson : "Rumor I heard is it's more of a modification through a website, cutting LO's out. Again, that's the rumor I just heard from a VP here."
Andrew Horowitz : "refi program would be a great stimulus program IMO"
David Z. : "I disagree Brent. Every refi is instant 10's of thousands in stimulus"
Brent Borcherding : "Nothing can be done that is going to "help" the economy in 6-9 months anyway, AH...it would take any program time to see results."
John McClellan : "my fear is that the closer we get to the election the more the adminstration will feel they need to do something dramatic - while NOT thinkiing it through...shocking ...i know"
Matthew Graham : "Auction results in about 5 min. Average bid-to-cover has been 3.2's. Average indirects in the high 30%'s 7 out of the last 7 auctions have had lower yields than WI. Today is also the first 3yr since Twist began."