MBS MID-DAY: Stronger And Sideways Ahead Of Auction

By: Matthew Graham
MBS Live: MBS Morning Market Summary
A welcome break from the recent norms this morning as bond markets have remained stable in slightly better territory.  The strength began as the start of the overnight session and although we did get the customary weakness into European hours, it wasn't as developed as it has been in the previous three sessions.  Even after a stronger than expected Jobless Claims print, bond markets rallied and have held those gains since the 10am hour (which has been roughly the turning point for weakness so far this week).  We may still see some sort of concession ahead of the 30yr Auction at 1pm, but if we're continuing to hold at or above 103-20 in Fannie 3.0s and at or below 1.80 in 10yr yields, we may finally be looking at the end of the post-NFP range-finding process.  Retail Sales tomorrow morning would be the only other hurdle.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
103-22 : +0-05
FNMA 3.5
105-29 : +0-04
FNMA 4.0
106-20 : +0-01
FNMA 4.5
107-19 : +0-00
GNMA 3.0
105-10 : +0-05
GNMA 3.5
108-07 : +0-04
GNMA 4.0
109-11 : +0-01
GNMA 4.5
109-06 : +0-01
FHLMC 3.0
103-08 : +0-06
FHLMC 3.5
105-21 : +0-04
FHLMC 4.0
106-13 : +0-02
FHLMC 4.5
106-28 : +0-02
Pricing as of 11:04 AM EST
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.

9:17AM  :  Stronger Following Jobless Claims, Uneventful Overnight
Bond markets pulled back from Wednesday's sell-off somewhat during the Asian session, ultimately hitting 1.788 (10yr yields) around 3am. Yields then reversed course and headed right back to 1.81 by 8am. This is a fairly narrow range, and could just as easily be considered a "flat" overnight session.

Domestic traders started buying longer maturity Treasuries right around 8am, helping 10's rally into the Jobless Claims data. The data itself, was better than expected--a fact that would normally pose some challenges for bond markets.

Indeed there was a brief (very brief) spat of weakness following the initial print, but it lasted all of 2-3 minutes before reversing course and taking both MBS and Treasuries to their best levels of the morning.

Fannie 3.0 30yr MBS are up 4 ticks at 103-20 and 10yr Treasuries are down 1bp at 1.7913%. S&P futures are about a half a point in the green ahead of the cash open a 9:30. The only other significant scheduled event for the day is the 30yr Bond Auction at 1pm.
8:49AM  :  ECON: Import Prices As Expected, Export Prices Lower
- Import Prices -0.5 vs -0.5 consensus
- Export Prices -0.4 vs +0.1 consensus
- Market Reaction: None. This data set is a benchwarmer

The price index for U.S. imports declined 0.5 percent in March, the U.S. Bureau of Labor Statistics reported today, following increases of 0.6 percent in February and 0.5 percent in January. The March decrease was primarily led by a downturn in fuel prices. U.S. export prices fell 0.4 percent in March after rising 0.7 percent in February.
8:41AM  :  ECON: Jobless Claims Lower Than Expected
- Claims 346k va 365k Consensus
- Previous week revised higher to 388k
- 4 week average rises to 358k from 355k
- Continued claim 3.079 mln vs 3.066 mln consensus
- Market Reaction: surprisingly resilient. Bond markets stepped back briefly, but are now at their best levels of the morning.

In the week ending April 6, the advance figure for seasonally adjusted initial claims was 346,000, a decrease of 42,000 from the previous week's revised figure of 388,000. The 4-week moving average was 358,000, an increase of 3,000 from the previous week's revised average of 355,000.

The advance seasonally adjusted insured unemployment rate was 2.4 percent for the week ending March 30, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 30 was 3,079,000, a decrease of 12,000 from the preceding week's revised level of 3,091,000. The 4-week moving average was 3,079,250, an increase of 5,250 from the preceding week's revised average of 3,074,000.
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.

Christopher Stevens  :  "Obama mtg with Blankfein, Dimon and other bank leaders today. Love to be a fly on the wall for that."
Matthew Graham  :  "RTRS - EUROGROUP'S DIJSSELBLOEM SAYS EURO ZONE FINANCE MINISTERS LIKELY TO AGREE 7-YR LOAN EXTENSIONS FOR PORTUGAL, IRELAND ON FRIDAY "
Christopher Stevens  :  "Bloomberg: "Labor says plunge in jobless clims reflects unwinding of seasonal swings""
Victor Burek  :  "which probably explains the drop in claims"
Victor Burek  :  "wasnt monday of that week a holiday?"
Christopher Stevens  :  "bonds didn't even flinch at that number"
Oliver S. Orlicki  :  "not surprised after fridays number"
Victor Burek  :  "easter?"
Matthew Graham  :  "RTRS- US CONTINUED CLAIMS FELL TO 3.079 MLN (CONS. 3.066 MLN) MARCH 30 WEEK FROM 3.091 MLN PRIOR WEEK (PREV 3.063 MLN) "
Christopher Stevens  :  "hmmm...thats a big drop"
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS FELL TO 346,000 APRIL 6 WEEK (CONSENSUS 365,000) FROM 388,000 PRIOR WEEK (PREVIOUS 385,000) "
Brayden Alexander  :  "Clayton if that was a suggestion for me I can't due to dti issues. "
Oliver S. Orlicki  :  "if FHA, they will use the purchase price of the original FHA loan"
Brayden Alexander  :  "Scenario: client bought home 13 months ago for 190. It was appraised at 220 when purchased. If I streamline now do I use the pp or av?"
Dan Clifton  :  "ha, now that the chart for 4/9 is gone, 4/10 looks so much more volitile"
Matt Hodges  :  "CLB - two things -1. you can roll 30 days of interest in a streamer, even if no appraisal and 2. close it in the last four/five days of month, so that with rescission, it funds near or on the last day of the month, given HUD will collect all 30 days of interest regardless"
B-C  :  "I have them skip, if they close in April I have them bring that payment, skip May"
Craig LaBruno  :  "Hey guys. Gm!! Do you guys have your clients skip a mortgage payment on FHA streamlines? Or just have them come to the table with their payment and have their new mortgage start the following month?"

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