MBS RECAP: Europe Returns, Drama In Tow, Markets Sleepy Anyway
By:
Matthew Graham
•
MBS Live: MBS Afternoon Market Summary
After several weeks without European headlines to sink our teeth into, today's overnight session brought back a decent helping of the good stuff. Well-regarded German paper Der Spiegel was out early in the session claiming that ECB would put ceilings on peripheral bond yields. The ECB quickly fired back quickly calling the report "absolutely misleading," and further asserting that they would not consider something outside their mandate and that markets should not speculate on anything else. Ah Eurodrama... We missed you.... That took bond markets from the red to the green where they stayed surprisingly--eerily almost--stable throughout the session. Fannie 3.0s got some play, but things remained most concentrated (what little volume there was) in Fannie 3.5s. 10yr yields essentially went out unchanged vs Friday.
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.
1:08PM :
Holding Gains As Slow Morning Becomes Slow Afternoon
Things are slow, but perhaps slightly less slow than we'd expect of a data-less Monday in August with Treasury volumes running about 75% of their 10 day averages. Origination has been relatively quiet as well, allowing MBS to easily keep pace with the moderate gains.
But "moderate" is really the operative word there... Most of the visual impact on today's 2-day MBS charts is attributable to the narrowness of the range and the fact that we began the morning in negative territory. Nevertheless, we're holding those gains fairly well so far this afternoon with Fannie 3.0s and 3.5s both up 3 ticks at 102-10 and 104-27 respectively.
Some lenders out with initial rate sheets before the 9:50am pop higher have repriced positively and it's possible we'd see another "stability reprice" or two if current levels are held or improved upon.
Bigger picture, there are positive and negative way to read current trading levels. On the one hand, we have a 3rd bounce off something near 1.86 in 10yr yields (occurred overnight) which seems positive at first glance (and probably is). On the other hand, there's an equally compelling case for resistance underfoot as 10's are persistently challenged in breaking meaningfully back into the 1.7's with another noticeable bounce today, matching the number of positive recent bounces.
But "moderate" is really the operative word there... Most of the visual impact on today's 2-day MBS charts is attributable to the narrowness of the range and the fact that we began the morning in negative territory. Nevertheless, we're holding those gains fairly well so far this afternoon with Fannie 3.0s and 3.5s both up 3 ticks at 102-10 and 104-27 respectively.
Some lenders out with initial rate sheets before the 9:50am pop higher have repriced positively and it's possible we'd see another "stability reprice" or two if current levels are held or improved upon.
Bigger picture, there are positive and negative way to read current trading levels. On the one hand, we have a 3rd bounce off something near 1.86 in 10yr yields (occurred overnight) which seems positive at first glance (and probably is). On the other hand, there's an equally compelling case for resistance underfoot as 10's are persistently challenged in breaking meaningfully back into the 1.7's with another noticeable bounce today, matching the number of positive recent bounces.
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.
Michael Kelleher : "REPRICE: 2:45 PM - MSI Better"
Jason Wilborn : "in times like these -MND is priceless"
Jon : "MG - "no idea what that implies for the rest of August"...it implies eyes glued to the charts! Green, green, green!"
Jason Wilborn : "day traders world, we're just living in it"
Matthew Graham : "no idea what that implies for the rest of August. "
Matthew Graham : "gonna need to see some post-labor day supportive gestures. and market reactions to all the "stuff" at the beginning of September"
Brent Borcherding : "Agreed, though I welcome some convincing evidence to the contrary."
Matthew Graham : "Yeah, jury's out for me on that one as well. I want to hope for a bounce back, and to get that reassurance that "it was all just a bad dream," re: thin trading conditions, market participants on holiday, weird FOMC Speaker schedule, lack of EU drama, you know.... all that nearly-perfect storm stuff. But 2 days holding mostly sideways ain't doin' it for me."
Jason Wilborn : "we'll probably move a little lower from here "
Brent Borcherding : "This, admittedly, does feel like just a breather before more selling, but hey, who talks about feelings anyway?"
Andrew Horowitz : "funny MG i was just thinking that about the 10 year myself, need to break back into the 1.70's solidly and hold below the 1.79 level before i turn even remotely optimistic abuot this little rebound"
Michael Kelleher : "mobile mbs is awesome"
Matthew Graham : "www.mobilembs.com"
Justin Dudek : "what is the mobile website link for MND? "
Matthew Graham : "short term, yes, I was talking about resistance to "turning green" basically, which both MBS and Treasuries have done (though just barely in the case of the latter). Longer term, would like to see a more concerted effort to test high 1.7's as opposed to see 10's with their back up against the wall at 1.81+"
rford : "MG, have we broken thorugh those resistance levels you spoke of at 9:32am this morn in MBS?"
Gus Floropoulos : "REPRICE: 1:55 PM - PHH Better"
Victor Burek : "with oil near 100...no way they can do QE3"
Chris Kopec : "Sounds like Dec 2010 logic"
Victor Burek : "i read an interesting article that said the reason treasury yields have risen is market believes we are going to get QE3 and it will be highly inflationary"
Christopher Stevens : "Let's assume the Fed will not announce QE3 in September. Ha sthe market already priced this in or do we need o hear some verbage that QE3 is still possible and they will act as needed?"
Matthew Graham : "RTRS - OBAMA SAYS HOUSING MARKET IS "BEGINNING TO TICK UP" BUT NOT WHERE IT NEEDS TO BE "
Curt Sandfort : "if you have the committment you are fine, but on the others you are SOL thanks for playing."
Tom Bartlett : "my area is on the list that is no longer eligible come oct. 1.... yikes"
Tom Bartlett : "USDA is officially out of Re-finance funds? Any updates?"
Matt Hodges : ".5% FF, unless disability rated"
Victor Burek : "VA question...client has used his VA eligibiltiy twice..2 seperate home buys...he doesnt think he qualifies for a VA streamline since he has used the VA loan twice...this client coudl doa IRRL, right?"
Christopher Stevens : "interesting article on G-Fees http://www.americanbanker.com/issues/177_159/gses-future-now-hinges-on-mortgage-guarantee-fees-1051914-1.html"
Matthew Graham : "German votes, FOMC, return of volume. Well, I guess I have discussed it a bit."
Matthew Graham : "not really. Seems to be the assumption though."
Jason Wilborn : "i am sure that has all been discussed by the illustrious MG "
Jason Wilborn : "rubber starts to hit the road in EU"
Jason Wilborn : "first couple of weeks in Sept will define the rest of the year for us I think"
S John Murray : "Jeff Chase jumbo requies thier own appraisers and they can take up to 45 days so give yourself plenty of time"
Matt Hodges : "Wells Fargo is in midst of RP"
LSP : "If you have strong borrower, low ltv and need vanilla guidelines, Chase and BB&T aren't bad."
Jeff Suits : "What lenders are offering you good jumbo fixed rate mortgages. "
LSP : "REPRICE: 11:57 AM - Franklin American Better"
LSP : "REPRICE: 11:39 AM - Chase Better"
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