MBS RECAP: Rally Mode Engage! MBS Outperform!
By:
Matthew Graham
•
MBS Live: MBS Afternoon Market Summary
The bad employment numbers keep on coming and the good times keep on rolling for bond markets. Specifically, MBS tightened vs Treasuries in a BIG way today, meaning that mortgages made up a good chunk of the massive amount of ground lost so far in 2013. The spread between MBS "current coupon" (an interpolation of theoretical average YIELD from several active coupons) began the year in the mid 0.45 range and had risen to the high .7's by late March. Today they dropped from .75 to .68 peak to trough and are headed out the door at a still impressive .71. Several factors play into today's outperformance, not the least of which being the weeks and months of incessant underperformance so far in 2013, and a move back to annual low yields in Treasuries. Combine that with limited supply earlier in the day and a monthly prepayment report to front-run tonight and it was quite the active day behind the scenes in mortgage markets. The underlying gains were made possible by a broader front-running of NFP on the part of bond markets. The pendulum is swinging rapidly from bond markets having that "on the ropes" feeling with 10yr yields pushing over 2% a few weeks ago to retesting range limits around 1.75% today. Everything rests on NFP tomorrow, and the implied consensus is probably closer to 160k as far as the recent rally is concerned. In other words, there's a risk that bond markets need to see NFP at least that low to sustain current levels.
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.
12:06PM :
ALERT ISSUED:
MBS Hit New Highs, Positive Reprices Reported
Even though Treasuries haven't returned to their low yields of the morning, neither are they undergoing any major knee-jerk higher. MBS greatly appreciate this fact as it's allowed them an opportunity to catch up with the rally.
Fannie 3.0s are now at their best levels in over 3 months, up 10 ticks at 103-26, just through their previous highs of the day. We've seen one positive reprice so far and that remains a possibility for any lenders that released rate sheets near the price trough heading into and out of the 10am hour. The current move is all tradeflows/technicals, in that markets aren't reacting to any headlines at this point, but simply to movements in inter-related markets as well as their own technical levels.
Fannie 3.0s are now at their best levels in over 3 months, up 10 ticks at 103-26, just through their previous highs of the day. We've seen one positive reprice so far and that remains a possibility for any lenders that released rate sheets near the price trough heading into and out of the 10am hour. The current move is all tradeflows/technicals, in that markets aren't reacting to any headlines at this point, but simply to movements in inter-related markets as well as their own technical levels.
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.
Bill Laffey : "REPRICE: 1:58 PM - Cole Taylor Better"
Nate Miller : "REPRICE: 1:56 PM - Caliber Funding Better"
Christopher Stevens : "REPRICE: 1:47 PM - Chase Better"
Christopher Stevens : "REPRICE: 1:42 PM - Wells Fargo Better"
Kunal Khanna : "REPRICE: 1:28 PM - Freedom Mortgage Better"
Victor Burek : "Brent, plaza gave about .22 better"
Christopher Stevens : "REPRICE: 1:25 PM - Flagstar Better"
Lynn ONeal : "REPRICE: 1:23 PM - Franklin American Better"
Chip Harris : "Deppends on what happens tomorrow"
Nate Miller : "one would think pricing would be MUCH better than Monday morning, only seeing around .25-.5pt at best"
scott burman : "REPRICE: 12:51 PM - Chase Better"
Victor Burek : "REPRICE: 12:44 PM - Plaza Better"
Lynn ONeal : "REPRICE: 11:56 AM - Franklin American Better"
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