MBS RECAP: Bond Markets Level Off, Hold Ground Despite Contrary Data
By:
Matthew Graham
•
MBS Live: MBS Afternoon Market Summary
Both MBS and Treasuries put in convincing performances today as they held on to morning gains all day without taking part in the same sort of fluctuations that have characterized the past 3 sessions. This is either a convincing performance or merely an incidental one. The fact that both Jobless Claims and the 30yr Auction suggested higher rates combined with the reality of a fairly sideways and uneventful day for MBS and Treasuries spent in moderately improved territory seems to suggest some secret strength underpinning bond markets. Perhaps they really do "want" to hold their ground around current levels, or perhaps it's the same old uptrend in rates following last week's NFP and we're just at the deceptive edge, you decide (or maybe Retail Sales will tomorrow morning?):
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.
1:40PM :
Treasuries Pop Higher, MBS Heading Lower, Risk Uncertainty
We're not seeing any major headline or any correlated movement in other markets, but there was just a brisk move higher in Treasury yields just after 1:30pm. 10's moved from 1.793 to 1.804 in a few trades and MBS fell to their lowest levels since this morning's data.
It's very early to start talking about negative reprice risk and the actual gap between current prices and those in force during rate sheet print times is just barely edging into that .125 point difference.
So if this turns out to be a chunky tradeflow in Treasuries that works itself out, we may see no reprices, but if 10's continue pushing into the 1.8's and assuming MBS continue to allow this to suggest a test below 103-20, reprice risk is increasing. It's a few minutes too soon to tell how it will pan out, but for now, it looks like this might settle down, allowing MBS to escape unscathed.
It's very early to start talking about negative reprice risk and the actual gap between current prices and those in force during rate sheet print times is just barely edging into that .125 point difference.
So if this turns out to be a chunky tradeflow in Treasuries that works itself out, we may see no reprices, but if 10's continue pushing into the 1.8's and assuming MBS continue to allow this to suggest a test below 103-20, reprice risk is increasing. It's a few minutes too soon to tell how it will pan out, but for now, it looks like this might settle down, allowing MBS to escape unscathed.
12:25PM :
FHFA Extends HARP to 2015
Washington, DC – The Federal Housing Finance Agency (FHFA) today directed Fannie Mae
and Freddie Mac to extend the Home Affordable Refinance Program (HARP) by two years to
December 31, 2015. The program was set to expire December 31, 2013.
“More than 2 million homeowners have refinanced through HARP, proving it a useful tool for reducing risk,” said FHFA Acting Director Edward J. DeMarco. “We are extending the program so more underwater borrowers can benefit from lower interest rates.”
In addition, FHFA will soon launch a nationwide campaign to inform homeowners about HARP. This campaign will educate consumers about HARP and its eligibility requirements and motivate them to explore their options and utilize HARP before the program ends. HARP is uniquely designed to allow borrowers who owe more than their home is worth the opportunity to refinance their mortgage. Extending the program will continue to provide borrowers opportunities to refinance, give clear guidance to lenders and reduce risk for Fannie Mae, Freddie Mac and taxpayers.
“More than 2 million homeowners have refinanced through HARP, proving it a useful tool for reducing risk,” said FHFA Acting Director Edward J. DeMarco. “We are extending the program so more underwater borrowers can benefit from lower interest rates.”
In addition, FHFA will soon launch a nationwide campaign to inform homeowners about HARP. This campaign will educate consumers about HARP and its eligibility requirements and motivate them to explore their options and utilize HARP before the program ends. HARP is uniquely designed to allow borrowers who owe more than their home is worth the opportunity to refinance their mortgage. Extending the program will continue to provide borrowers opportunities to refinance, give clear guidance to lenders and reduce risk for Fannie Mae, Freddie Mac and taxpayers.
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.
Clayton Sandy : "and the payment has to come from a Wells account"
Clayton Sandy : "There's quite a few overlays"
Jason Anker : "oh, we were always lower than website, no exceptions"
Jason Anker : "it's the one thing (biased opinion) that they are good at"
Matt Hodges : "it's their WF retail website showing it and consumer confirming"
Jason Anker : "jumbo if it's with a PMB guy can be market leading"
Matt Hodges : "current pricing on WF retail jumbo = conforming. i wanted confirmation"
Matt Hodges : "are their any WF retail LOs available for a Q?"
Matthew Graham : "OO, I'm sure inquiring minds would like to know--myself included. We can only guess at the underlying reasons, but certainly it was palpable after yesterday's lack of response. Personally, I think that US markets are setting the tone for the week and are/were tentatively planning on leveling off somewhere before getting back up to trading levels that generally coincide with the big 1.82-1.84 zone. I don't know if they're sure where they're going to go next, but the auctions were more of a mat"
Oliver S. Orlicki : "mg, any reason why?"
Matthew Graham : "extremely limited reaction volume-wise. Much lighter than the normal conclusion of a 3. 10,30 week"
Victor Burek : "but at these levels, i will take blah"
Oliver S. Orlicki : "auctions were blah this week"
Victor Burek : "santelli gave it a c-"
Matthew Graham : "C-"
Matthew Graham : "RTRS- US TREASURY - PRIMARY DEALERS TAKE $6.41 BLN OF 29-YEAR 10-MONTH BONDS SALE, INDIRECT $4.09 BLN "
Matthew Graham : "RTRS- U.S. 29-year 10-month bond BID-TO-COVER RATIO 2.49, NON-COMP BIDS $5.52 MLN "
Matthew Graham : "RTRS- U.S. SELLS $13 BLN 29-YEAR 10-MONTH BONDS AT HIGH YIELD 2.998 PCT, AWARDS 33.48 PCT OF BIDS AT HIGH "
Matthew Graham : "30yr Auction coming up.. Average bid-to-cover has been 2.61 for the last 4 auctions, with the most recent being 2.43. Reopenings have been a bit weaker than refundings in terms of the awarded yield, though the opposite is historically the case. Today's is a reopening of the new 30yr refunding in February. Indirect bidders have taken roughly 37.5% of the last 4 auctions. The current estimated yield award (when-issued yield) is at 2.989, but this may change slightly before 1:01pm. (if this"
Ted Rood : "I'll second that, if they also allow prior HARP borrowers to go again!"
Rob Clark : "REPRICE: 12:40 PM - Provident Funding Better"
Andy Pada : "let's hope the HARP extension date is a precursor to new eligibility dates"
Matt Hodges : "it does not show up in any way as a short, so i think they immediately have restored full VA eligibility"
Matt Hodges : "i did one 2 years ago, which would have been a short sale, but i can't remember any waiting period. have you looked through the 2 page HAP brochure?"
Edward OKeefe : "Hello, new to forum. How long after a veteran completes the HAP program will they be eligible to buy a home. First time coming across this."
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