MBS RECAP: Heading Out Sideways Near Opening Levels
By:
Matthew Graham
•
MBS Live: MBS Afternoon Market Summary
By the time all is said and done today, both MBS and Treasuries are heading toward 5pm roughly in line with 8am levels. That unwinds a bit of the positivity experienced after this morning's weak Jobless Claims report but keeps the post-press-conference and overnight gains intact. Things had been a bit more upbeat until stocks began rallying hard after 1pm, bringing bond yields along for the ride. MBS fell about 4 ticks since then but no negative reprices were seen.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
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Afternoon Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this afternoon.
1:44PM :
ALERT ISSUED:
Stock Lever Ushering Bond Prices To Post-Claims Lows
MBS and Treasuries are at or below their lowest prices of the day after an unexpected jolt of volume and positivity hit stock markets. S&P futures have seen their two biggest volume surges of the day at 1:19pm and 1:40pm respectively. We don't know what's behind those pops, but we do know it's exerting some pressure on bond markets. Reprice risk is shifting negatively with Fannie 3.5 MBS at 103-20.
1:09PM :
ALERT ISSUED:
Record Low Yield For 7yr Auction, Decent Demand, Good Result
The 7 year Treasury auction was Good even if not stellar. There were few detractors from this one--basically right on the money with a small 'stop-through,' and 2.83 bid-to-cover vs recent average of 2.81. Indirects were just slightly off the pace at 38% vs 40% avg.
Bond markets haven't reacted much at all. The auction was a non-issue and will not produce any noticeable sell-off or rally. Though the first movement after the results was slightly positive, we've since moderated back to 'flat,' and what little volume there was, is dying down for now.
Bond markets haven't reacted much at all. The auction was a non-issue and will not produce any noticeable sell-off or rally. Though the first movement after the results was slightly positive, we've since moderated back to 'flat,' and what little volume there was, is dying down for now.
12:57PM :
7yr Auction Preview
- Recent Average Bid-to-Cover = 2.81
- Stop-throughs (high yield comes in lower than "when-issued" yield at 1pm) are rare, but the last two examples have been big.
- Indirects have averaged around 40%
- This is close to lowest if not the lowest 7yr yielding auction on record (should be). Next closest was 1.359%. Current WI (when-issued) = 1.349, so it could be close.
Bond markets have been flat at strong levels all day. The street knows that 7's are a tough auction, and we're still thinking that a decent take-down is a non-issue or net-positive as long as it's close to averages (even if it's slightly weaker).
- Stop-throughs (high yield comes in lower than "when-issued" yield at 1pm) are rare, but the last two examples have been big.
- Indirects have averaged around 40%
- This is close to lowest if not the lowest 7yr yielding auction on record (should be). Next closest was 1.359%. Current WI (when-issued) = 1.349, so it could be close.
Bond markets have been flat at strong levels all day. The street knows that 7's are a tough auction, and we're still thinking that a decent take-down is a non-issue or net-positive as long as it's close to averages (even if it's slightly weaker).
Live Chat Featured Comments
A recap of the featured comments from the MBS Live Dashboard's Live Chat feature, utilized by hundreds of industry professionals each day.
Matthew Graham : "http://www.reuters.com/article/2012/04/26/idUS255273+26-Apr-2012+BW20120426"
Jeff Anderson : "Hey MG, Do you have a link on the Reverse info regarding Metlife you can send me? Thanks."
Matthew Graham : "RTRS - METLIFE BANK WILL NO LONGER ACCEPT NEW REVERSE MORTGAGE LOAN APPLICATIONS AND REGISTRATIONS"
Matthew Graham : "RTRS - METLIFE EXITS REVERSE MORTGAGE BUSINESS "
Jason Adams : "REPRICE: 1:56 PM - Flagstar Better"
Gaius Rossini : "yeah that sounds about right"
Matthew Graham : "to get MBA index back to early Feb levels, probably need 3.75 to be a rate that any lender can do with no closing costs"
Brent Borcherding : "We lower and hold 1.7 to 1.8 and as MG mentions spreads stay the same...everything picks up again."
Matthew Graham : "but there's an implicit bet on spread tightening in that response."
Matthew Graham : "given spread levels, seems like we wouldn't need much more than stability under 2% Gaius"
Gaius Rossini : "how much will primary rates need to drop for it to take another leg up?"
Matt Hodges : "continuous"
Matt Hodges : "we are in a spike right now"
Matthew Graham : "Art Cashin... right on top of the action.."
Gaius Rossini : "hey i know it's guessing, but what do you guys think the 10y will need to be at for us to see another spike in refinance business?"
Brent Borcherding : "Arthur Cashin says its because the Bernak confirmed the Fed is here to help you if you fall. Risk on."
Matthew Graham : "I think we basically heard bernanke say there will be qe3 if the recovery falters. only two questions are a) will that happen and b) if it does, what's the Fed's line in the sand before acting."
Andy Pada : "So have the equity and bond markets priced in a slim-to-no chance of QE3? Is this our range without QE3?"
Jason York : "you can always add, but removing a borrower comes with conditions"
Jason York : "yes"
Edgar : "I think I no the answer: Can you add a spouse to the loan under HARP 2.0? She is on the property, but not on the loan and borrower's DTI is nearly 50% without adding the spouse."
Matthew Graham : "thanks AP. good to know b/c I don't see anything on it either. Could be unrelated to fundamentals. happens sometimes, but it looks attributable to something. Rare to go this long without finding out what"
Andy Pada : "no one seems to be discussing the rally"
Matthew Graham : "well, something relatively important happened at 1:18 in equities... largest minute of volume today. "
Matt Hodges : "seems Bismarck may still be lending CP money to brokers, curt"
Curt Sandfort : "BB, you have a broker source for construction? what is it?"
Dirk Postupack : "FYI....Everbank has suspended doing MI transfers from UG....taking 45 days to do the transfers"
Rob Clark : "REPRICE: 11:58 AM - Provident Funding Better"
Mike Pennington : "REPRICE: 11:25 AM - Flagstar Better"
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