MBS MID-DAY: 1/30/2012

By: Matthew Graham •
MBS Live: MBS MID-DAY
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FNMA 3.5
103-29 : +0-07
FNMA 4.0
105-23 : +0-04
FNMA 4.5
106-27 : +0-03
FNMA 5.0
108-01 : +0-02
GNMA 3.5
105-07 : +0-04
GNMA 4.0
107-26 : +0-03
GNMA 4.5
109-07 : +0-01
GNMA 5.0
110-23 : -0-01
FHLMC 3.5
103-22 : +0-06
FHLMC 4.0
105-15 : +0-04
FHLMC 4.5
106-11 : +0-04
FHLMC 5.0
107-18 : +0-04
Pricing as of 11:03 AM EST
Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.
8:54AM  :  ALERT: MBS Continue at All-Time Highs After Consumer Spending Report
Owing mostly to overnight news concerning Greece's rejection of an EU-appointed budget watchdog appointed to Athens as a condition of bailout money, MBS continue to nibble at breaking all time highs at 103-29. Volume and price reaction to the PCE data was moderate, but likely would have been more discernible without the Greece news in the picture.

Fannie 3.5 MBS last saw 103-29--their current level--only briefly in late September. 10yr yields are showing somewhat limited inclination to rally past 1.83 so far this morning, but on the other hand, have been consistently and slowly rallying since 3:00 AM.

There's no other significant piece of economic data today although the Fed is set to buy in the 10yr sector later this morning. If MBS and Benchmark TSYs continue trading the tight ranges seen so far this morning, rate sheets should log another noticeable improvement from last week, although a lot of this will probably be seen in the form of middle-to-bottom of the pack lenders taking steps toward the leaders, whereas the leaders themselves have relatively little incentive to get much more aggressive from Friday's latest offerings. Yes, they should still improve if current prices hold, but the middle-of-the-pack should improve more.
8:41AM  :  ECON: Consumers Earned More, Spent Less in December
PCE is a fairly important economic report, speaking both to consumer spending and standing as the Fed's preferred gauge of inflation. Today's numbers essentially show a US Consumer earning slightly more and spending less inflation-adjusted dollars for the first time in 3 months--generally a bond-market-positive result, but perhaps even more damaging to stocks.

  • RTRS - PERSONAL SPENDING 0.0 PCT (CONSENSUS +0.1 PCT) VS NOV +0.1 PCT (PREV +0.1 PCT)
  • RTRS - PERSONAL INCOME +0.5 PCT (CONS +0.4 PCT) VS NOV +0.1 PCT (PREV +0.1 PCT)
  • RTRS - CORE PCE PRICE INDEX +0.2 PCT (+0.1530; CONS +0.1 PCT) VS NOV +0.1 PCT (PREV +0.1 PCT)
  • RTRS - OVERALL PCE PRICE INDEX +0.1 PCT (+0.0673) VS NOV 0.0 PCT (PREV 0.0 PCT)
  • RTRS - YEAR-OVER-YEAR PCE PRICE INDEX +2.4 PCT VS NOV +2.6 PCT (PREV +2.5 PCT); CORE +1.8 PCT VS NOV +1.7 PCT (PREV +1.7 PCT)
  • RTRS - REAL CONSUMER SPENDING -0.1 PCT VS NOV +0.1 PCT (PREV +0.2 PCT)
  • RTRS - PERSONAL SAVING RATE 4.0 PCT VS NOV 3.5 PCT
  • RTRS - MKT-BASED PCE PRICE INDEX +0.1 PCT (NOV 0.0 PCT), CORE +0.2 PCT (NOV +0.1 PCT)
  • RTRS - MKT-BASED YEAR-OVER-YEAR PCE PRICE INDEX +2.5 PCT, CORE +1.9 PCT
  • RTRS - 2011 PERSONAL INCOME +4.7 PCT, PERSONAL SPENDING +4.7 PCT, BOTH LARGEST INCREASES SINCE 2007
  • RTRS - PERSONAL INCOME RISE LARGEST SINCE MARCH 2011 (+0.5 PCT), PERSONAL SPENDING WEAKEST SINCE JUNE 2011 (-0.2 PCT)
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.
Steven Stone  :  "you have to save 5% if its a hybrid arm during the fixed period"
Chip Harris  :  "An FHA borrower can do a streamline and not have to save 5% if going from arm to fixed, right?"
Gus Floropoulos  :  "have to give them some when 3.75% on a 30yr is not costing consumers"
Jeff Anderson  :  "Gm, all. I'd say fortunate more than a coincidence, Gus. Don't give the gov't too much credit."
Gus Floropoulos  :  "just saying if mbs didnt have this recent rally ysp's would be less attractive and potentially creating higher borrowing costs for consumers"
Matthew Graham  :  "what are you thinking is coincidental g-flo?"
Gus Floropoulos  :  "recent rally in mbs has helped offset gfee in rate spreads.....coincidence?"
Victor Burek  :  "gonna be some pretty rate sheets this morning"
Matthew Graham  :  "RTRS - US DEC PERSONAL INCOME RISE LARGEST SINCE MARCH 2011 (+0.5 PCT), PERSONAL SPENDING WEAKEST SINCE JUNE 2011 (-0.2 PCT) "
Matthew Graham  :  "RTRS - US 2011 PERSONAL INCOME +4.7 PCT, PERSONAL SPENDING +4.7 PCT, BOTH LARGEST INCREASES SINCE 2007 "
Matthew Graham  :  "RTRS- US DEC CORE PCE PRICE INDEX +0.2 PCT (+0.1530; CONS +0.1 PCT) VS NOV +0.1 PCT (PREV +0.1 PCT"
Matthew Graham  :  "RTRS- US DEC PERSONAL SPENDING 0.0 PCT (CONSENSUS +0.1 PCT) VS NOV +0.1 PCT (PREV +0.1 PCT) "
Matthew Graham  :  "all time highs for Fannie 3.5's"
Mike Drews  :  "maybe we'll crack 104 today?"
Mike Drews  :  "well this looks promising!"