MBS MID-DAY: Weaker To Start, Sideways Through Mid-Morning, Now Weaker Again
By:
Matthew Graham
•
MBS Live: MBS Morning Market Summary
Somewhat disconcerting movement in bond markets this morning... The fact that we opened in weaker territory than yesterday isn't really that troublesome, nor is the fact that we traded in a fairly narrow, sideways range through most of the morning. The concerns arise just after 11am Eastern as we find both MBS and and Treasuries breaking out of the weak sides of their respective ranges. This is a more serious issue for Treasuries actually as there's a technical level just over 1.86 that has offered a few good supportive bounces recently. So far, we look to be bouncing yet again, but if 10's were to break higher beyond 1.862 and hold those losses, then additional MBS weakness would likely follow.
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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Morning 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 morning.
8:59AM :
ALERT ISSUED:
Possibility Of "Concessions" For Greece Hits Bond Markets Overnight
MBS and Treasuries are beginning the day in weaker territory after a German official said that "concessions are possible" regarding Greece's ongoing inability to come to terms with their bailout package. A more lenient Germany when it comes to the European periphery is no friend to low yields. Spain also conducted successful auctions at lower yields than the last time similar issues were auctioned.
10yr Treasuries were generally flat leading into the European session, but began the move up in earnest around 3:30am. Thus far, we haven't seen yields as high as yesterday's overnight highs near 1.86, but 10's did hit 1.847 in the first hour of domestic trade, and in higher volume than yesterday's 1.859.
MBS opened several ticks weaker and have been in a choppy/sideways pattern since, with Fannie 3.0's down 6 ticks at 102-05 and 3.5s down 4 ticks at 104-24.
There is nothing significant on the calendar for the rest of the day and this morning's Fed-Speak from Lockhart was largely a non-event, though there were a few Hawkish undertones as he mentioned the risk that monetary policy is too aggressive without addressing problems that can only be dealt with via fiscal reforms.
From a technical analysis standpoint, there's reason to be concerned that any significant weakness today could further suggest a "bull pennant" for Treasury yields is in the works. Read more in The Day Ahead:
10yr Treasuries were generally flat leading into the European session, but began the move up in earnest around 3:30am. Thus far, we haven't seen yields as high as yesterday's overnight highs near 1.86, but 10's did hit 1.847 in the first hour of domestic trade, and in higher volume than yesterday's 1.859.
MBS opened several ticks weaker and have been in a choppy/sideways pattern since, with Fannie 3.0's down 6 ticks at 102-05 and 3.5s down 4 ticks at 104-24.
There is nothing significant on the calendar for the rest of the day and this morning's Fed-Speak from Lockhart was largely a non-event, though there were a few Hawkish undertones as he mentioned the risk that monetary policy is too aggressive without addressing problems that can only be dealt with via fiscal reforms.
From a technical analysis standpoint, there's reason to be concerned that any significant weakness today could further suggest a "bull pennant" for Treasury yields is in the works. Read more in The Day Ahead:
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.
Andy Pada : "and I understand that we, the individuals of MBS Live, are more than just our jobs. But my job is what supports my family, my company, and to certain my community."
Andy Pada : "yes, VB. I'll take that tradeoff; and to be fair, I am influenced into that tradeoff because of my profession and livelihood."
Victor Burek : "i dont believe the mortgage tax deduction will go away...way to tough to get that through congress"
Chris Kopec : "Andy, fair point about the GSEs.....but again, you see what happens when the GSEs are not "left alone". They functioned very well until they became political/fundraising cookie jars. "
Victor Burek : "so Andy, you would rather have the dems who might keep the mortgage tax deduction, but raise income taxes, then the repubs who might get rid of mortgage tax deduction but maybe lower your income taxes"
Andy Pada : "even if we adopt a simple understanding of the parties that one party is about leaving us alone, then that means that one party does not have a national housing policy. For all those who deride the European model, we can become like them - nations of renters."
Brent Borcherding : "Progress happens in spite of Washington."
Andy Pada : "if we want to hide behind that nothing gets done anyway in Washington, we abandon all of hopes of belief and progress."
Andy Pada : "my simple concern is this: the Republican party has now adopted a platform that will not protect the mortgage tax deduction and philosophically opposed to Fannie/Freddie/HUD. To me, that is the ball game."
Brent Borcherding : "AP--I know politics aren't the ideal subject matter here, but what you're talking about is its effect on our industry, so I say let's hear more. What your concerns for our industry if the Romney/Ryan ticket wins?"
Matthew Graham : "at least not that I could believe in"
Steven Stone : "guys get real - you can say anything you want when running for office...when is the last time we saw any actual change when a new president gets elected?"
Chris Kopec : "Andy....not to go off on a rant, but neither party cares about mortgage professionals. They care about those who employ mortgage professionals, and if those employers don't have our interests, we are royally screwed. There are a smattering of politicians that "get it" when it comes to the value of professional loan originators, but they are lost in the sea of political expediency."
Andy Pada : "not to mention what getting rid of the mortgage tax deduction would do to homeownership/housing demand."
Andy Pada : "A couple of weeks ago, I wrote about mortgage professionals voting against their own interest. The Business Week article seems to support my concern about mortgage professionals voting Republican."
Justin Dudek : "its like the eurozone is playing Deal or No Deal, might end up with .01 brief case"
Matthew Graham : "RTRS- LOCKHART SEES RISK OF MONETARY POLICY BEING TOO AGGRESSIVE, WITHOUT EFFECT IN ADDRESSING PROBLEMS THAT CAN ONLY BE DEALT WITH VIA FISCAL REFORMS "
Matthew Graham : "RTRS - LOCKHART SAYS U.S. WEAKNESS CAN BE ATTRIBUTED AT LEAST IN PART TO FUNDAMENTAL IMBALANCES THAT HAVE NOT BEEN CORRECTED"
Matthew Graham : "RTRS - LOCKHART SAYS STRENGTH OF U.S. RECOVERY REMAINS DISAPPOINTING "
Matthew Graham : "RTRS- FED'S LOCKHART SAYS MONETARY POLICY CAN EXERT POWERFUL POSITIVE INFLUENCE ON ECONOMY, BUT NOT A PANACEA "
Jeff Anderson : "GM, all. How often do you get a Shaq reference in a bond market article? Nice effort, MG."
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