MBS RECAP: Uneventful Session Turns Weaker Ahead Of FOMC
By:
Matthew Graham
•
MBS Live: MBS Afternoon Market Summary
There wasn't much going on today. This includes the overnight session, the morning "busy" hours (when Europe is still trading and the domestic session typically sees its highest volumes), and even the afternoon. The day began uneventfully, and even with some hint of positivity ahead of the stock market opening bell, but that was the end of it for bond markets. Stocks jumped higher at the open and cruised to another multi-year high closing mark by 4pm. Bond markets didn't exactly follow faithfully (which seemed good at first), but then popped higher in yield (lower in price) heading into the 2pm hour. An exceedingly light volume environment and narrow trading range made it easy for traders to push MBS and Treasuries right back to recent support levels tested on Friday. All of the above--to whatever extent we want to search for meaning in the movement--would seem to be a defensive set-up for tomorrow's FOMC Minutes.
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.
2:40PM :
ALERT ISSUED:
Reprice Risk Incrementally Increasing
Bond markets were very close to putting their foot down at the lows in Treasury prices seen roughly 10 minutes ago, but those lows just broke which is quickly giving way to another quick tick or two of selling pressure. This is immediately being seen and felt in MBS which responded with their own tick of incremental weakness.
10yr yields are up to 2.0243 and Fannie 3.0's are down 2 ticks on the day now at 102-26. Reprice risk is now approaching "moderate" levels (where some lenders are at greater risk while others aren't quite there yet). Even then, things are trending in unfriendly directions, more quickly now...
10yr yields are up to 2.0243 and Fannie 3.0's are down 2 ticks on the day now at 102-26. Reprice risk is now approaching "moderate" levels (where some lenders are at greater risk while others aren't quite there yet). Even then, things are trending in unfriendly directions, more quickly now...
2:16PM :
ALERT ISSUED:
Treasuries Break Highs, MBS Under Pressure, Reprice Risk
Treasuries came under pressure just over half an hour ago, ostensibly from corporate rate-lock selling (if for no other reason than we're not seeing much else to chalk the moves up to and got a few notes regarding new corporate bonds being priced). Now equities are adding on to that dogpile with S&P's breaking to new 5yr+ highs again (S&P cash closing in on 1530, currently 1528.97).
All of the above has put some nominal pressure on MBS, where Fannie 3.0's are now down 1 tick on the session at 102-28. With no material market movers behind the move and FOMC Minutes looming tomorrow, this little bout of selling would have a hard time materializing into something severe enough to merit widespread negative reprices. That said, the 4 tick move from highs to lows that's currently in place could constitute the smallest of negative reprice risks currently. We stand a better chance to hold ground here, but if we don't, negative reprice risk would increase very slightly. For now, it borders on non-existent.
All of the above has put some nominal pressure on MBS, where Fannie 3.0's are now down 1 tick on the session at 102-28. With no material market movers behind the move and FOMC Minutes looming tomorrow, this little bout of selling would have a hard time materializing into something severe enough to merit widespread negative reprices. That said, the 4 tick move from highs to lows that's currently in place could constitute the smallest of negative reprice risks currently. We stand a better chance to hold ground here, but if we don't, negative reprice risk would increase very slightly. For now, it borders on non-existent.
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.
Nate Miller : "REPRICE: 3:52 PM - Caliber Funding Worse"
MC : "REPRICE: 3:42 PM - Sierra Pacific Worse"
Matthew Graham : "RTRS- LOCKHART SAYS MOVING TOWARD A VIEW OF BALANCED RISKS IN THE ECONOMY; REDUCED UNCERTAINTY POSES UPSIDE RISKS TO GROWTH "
Matthew Graham : "RTRS- LOCKHART SAYS DOES NOT SEE ANY SIGNS OF A BUBBLE OR OVERHEATING IN FINANCIAL MARKETS "
Matthew Graham : "RTRS- LOCKHART SAYS U.S. LABOR MARKET UNLIKELY TO IMPROVE SUBSTANTIALLY IN VERY SHORT TERM "
Matthew Graham : "RTRS- FED'S LOCKHART SAYS FED SHOULD KEEP PURCHASING ASSETS THROUGH END OF 2013 "
Steve Chizmadia : "REPRICE: 3:17 PM - Sun West Mortgage Worse"
Andrew Peterson : "REPRICE: 2:59 PM - Interbank Worse"
Niccolo Satullo : "Let's be real- I was pumped when we hit 4.875% and lower. We have been spoiled"
Niccolo Satullo : "The market is, well, going to be the market- use the tools we have to guide our clients to the best choice. We should see days up and days down."
Michael Tadros : "REPRICE: 2:45 PM - Provident Funding Worse"
Christopher Stevens : "that's a sharp drop off"
Oliver S. Orlicki : "starting to look ugly"
Andy Pada : "today is just tapering before the race to 104"
Matthew Graham : "Moshe, Things seem genuinely conflicted and "2-way" around the 2% mark in 10's. That's roughly the 103-00 mark in Fannie 3.0s. Floating into FOMC Minutes is really a crap-shoot. You might gain or lose a bit overnight, but the Minutes at 2pm tomorrow could catalyze a bigger move away from these recent inflection points. Just like an NFP day, there's big potential in either direction, and in this case, it seems equally as "event-dependent." "
Moshe Berg : "lock today? what's the consensus?"
Matthew Graham : "BB, I think more than anything, markets are looking for a "2nd opinion" to help flesh out the seemingly less certain picture painted by the Jan 3rd minutes. Additionally, any shifts in tone owing to 2013 voter rotation are important as well."
Rob Clark : "REPRICE: 1:07 PM - Provident Funding Better"
Matt Hodges : "jason - as i said, i learned that from being in here. it's helped me on a couple of deals to use up all CC"
Chip Harris : "This narrow range ont he chart really magnifies things..."
Jason Anker : "MH - news to me on the VA seller money, thanks. "
Matthew Graham : "I guess that'd run counter to the statement itself, which was marginally more bullish. Also, the Fed theoretically didn't know what GDP would be by the time the meeting was done"
Brett Boyke : "MG in light of the 4Q GDP - do you think the FOMC tone tomorrow may potentially be more dovish?"
Matt Hodges : "i learned that from being a MBS Live member, btw"
Curt Sandfort : "excellent question MH, I don't think so because it's not a qualifying issue"
Ted Rood : "Damn.....seller can pay buyers' judgments????? Seems jacked up to me."
Matt Hodges : "again, i ask - is that all or nothing and do the credit cards needs to be closed?"
Matt Hodges : "I quote you from VA handbook: "Seller concessions include, but are not limited to, the following: payoff of credit balances or judgements on behalf of the buyer.""
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