MBS MID-DAY: 11/8/2011

It was a fairly quiet overnight session with headlines focused primarily on an impending budget vote in Italy (and possible Berlusconi ousting?) and the ongoing sorting-out process of Greece's new Prime Minister. Best we can tell, the shuffling of ruling parties in Greece DOES NOT look like it will preclude them from receiving their sixth tranche of bailout money (needed by year-end to avoid default) as long as whoever takes the reigns facilitates a vote to approve bailout terms. The fact that possibility exists and bond markets continue to trade near a 2% 10yr yield is a positive sign--one which might hint at the possibility that some sort of bond market bounce was in the cards before Papandreou threw his cards on the table.

The overnight trading action--light in volume--saw Treasuries and MBS walk in the door slightly weaker though the latter have rallied enough to turn green on the day with Fannie 3.5's up 1 tick at 102-03. 10yr yields are 2bps higher at 2.042.

There are no major economic reports this morning, but a 3yr Treasury Note Auction at 1pm. The combination of the auction and ongoing headlines out of Europe stand the best chances of ruling the roost among market-movers today.

Short term technical support just over 2.06 in 10's, and then the 2.12 zone. Fannie 3.5's short term at 101-31 with pivots at 102-06 and resistance at 102-12/13. Big support at 101-25/26.

The October 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the supply of, and demand for, bank loans to businesses and households over the past three months. This summary is based on responses from 51 domestic banks and 22 U.S. branches and agencies of foreign banks...

Current Release
Full Report

The national mortgage delinquency rate (the rate of borrowers 60 or more days past due) increased for the first time since the end of 2009, edging upward to 5.88% at the end of the third quarter in 2011. This information is reported by TransUnion and is part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards and auto loans.

"Until this quarter, we had seen six straight quarters where progressively more people were able to make their mortgage payments on time. We expected that trend to continue given recent, relatively more conservative lending policies and the apparent stabilization of both home values and unemployment," said Tim Martin, group vice president of U.S. Housing in TransUnion's financial services business unit. "However, in the third quarter, the consumer was hit with several unanticipated shocks, including the U.S. credit rating downgrade, stock price declines, European debt concerns, stubbornly high unemployment, more downward pressure on home values and low consumer confidence. All of this affects a borrower's net worth and desire, or ability, to continue making house payments -- especially if they are facing negative equity in their homes due to price depreciation."