MBS RECAP: 11/17/2011

Federal Reserve Bank of New York agency MBS transaction data is now available.

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(Reuters) - The trajectory of U.S. house prices is still a significant problem for the U.S. economic recovery, and if further monetary easing is called for the Federal Reserve might make more purchases of mortgage-backed securities, a top Fed official said on Thursday.

"If additional asset purchases were deemed appropriate, it might make sense to do much of this in the mortgage-backed securities market," said William Dudley, president of the New York Fed in a speech at the West Point Military Academy in West Point, New York. (Reporting by Ed Krudy; Editing by Padraic Cassidy)

It's still too soon to know how things will play out, but S&P's just fell about 20 points in 20 minutes, although have bounced back about 5 points. 10yr yields followed, and MBS rallied to a lesser degree, but have certainly broken through their previous downtrend. Fannie 3.5's are currently at 101-24, which may be good enough for a reprice for the early-to-act crowd of lenders (small crowd). But as is often the case, this is an early warning that reprices will become possible if current levels hold or are improved upon. Things remain too volatile to be able to say that with certainty.