MBS RECAP: Most Of Week's Losses Erased
By:
Matthew Graham
•
MBS Live: MBS Afternoon Market Summary
There was a twofold rally underway right from the outset today. Europe kicked things off overnight as the risk-on move that had been going strong all week finally reversed. Cyprus was back in the news--their bailout potentially in jeopardy unless they can come up with some more cash--but we were sort of "over" the big picture implications of Cyprus a few weeks ago and last-minute game changing isn't going to be a material concern for the bigger picture. The bigger deal is and has been Italy, and we've gone two weeks without any substantive information. Time is ticking on Napolitano's tenure and the country now looks set to elect a new President before they get around to figuring out how to govern themselves. Meanwhile the proposals from the 10 Wise Men came out today and will collect dust until talks resume after the Presidential election. Not surprisingly, Italy led European markets lower overnight, to the benefit of Bunds and Treasuries. In light of that, we're not entirely sure an on-pace Retail Sales print would have been enough to send US bond markets back into weaker territory. So next week becomes EU headlines vs domestic earnings against the backdrop of fairly limited econ data and events.
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.
1:13PM :
Stock Lever Disconnect. New Highs For MBS. Positive Reprices
Despite an ongoing bounce back in equities, and previous correlation notwithstanding, Treasuries have revisited their low yields at 1.726 and MBS ratcheted up to another intraday high at 104-03.
The positive reprice potential among the vanguard lenders mentioned in the last update has since played out (+1 non-vanguard lender even), and current levels leave the door open for more to jump in, even if not in droves.
The positive reprice potential among the vanguard lenders mentioned in the last update has since played out (+1 non-vanguard lender even), and current levels leave the door open for more to jump in, even if not in droves.
11:38AM :
Stock Lever Staying Connected, For Better Or Worse
The stock lever was a bit of a drag on bond markets heading into late morning data, and the opposite was true until just a few minutes ago. Weaker-than-expected Consumer Sentiment data confirmed a bounce off the highs for stocks, which then flushed lower over the next hour. Bond markets resisted the move at first, but 10's eventually broke their previous low at 1.736 and moved as low as 1.726 as stocks continued moderate selling.
MBS generally followed this same pattern with prices of Fannie 3.0s encountering plenty of resistance at 104-00, but ultimately breaking above to 104-02 in concert with the broader moves.
The selling in stocks bottomed out (at least for now) just after 11am and bond markets continue to stay well-correlated, similarly pulling back from their best levels of the day. But although the correlation is there, Treasuries and MBS are adhering more to the "slow and steady" philosophy, and refusing to come off their best levels quite as quickly as stocks bounce off their worst levels.
That leaves Fannie 3.0s +10 ticks on the day at 104-00 even and 10yr yields down 5.8bps at 1.7328. S&P's are down around 10 points currently. For what it's worth, MBS are 5 ticks higher than some lenders' rate sheet print times. If we continue to hold current levels or improve upon them, positive reprice potential is an outside possibility for a few vanguard lenders.
MBS generally followed this same pattern with prices of Fannie 3.0s encountering plenty of resistance at 104-00, but ultimately breaking above to 104-02 in concert with the broader moves.
The selling in stocks bottomed out (at least for now) just after 11am and bond markets continue to stay well-correlated, similarly pulling back from their best levels of the day. But although the correlation is there, Treasuries and MBS are adhering more to the "slow and steady" philosophy, and refusing to come off their best levels quite as quickly as stocks bounce off their worst levels.
That leaves Fannie 3.0s +10 ticks on the day at 104-00 even and 10yr yields down 5.8bps at 1.7328. S&P's are down around 10 points currently. For what it's worth, MBS are 5 ticks higher than some lenders' rate sheet print times. If we continue to hold current levels or improve upon them, positive reprice potential is an outside possibility for a few vanguard lenders.
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.
Tom Schwab : "REPRICE: 12:55 PM - Franklin American Better"
Christopher Stevens : "REPRICE: 12:34 PM - Chase Better"
Matt Hodges : "i don't know then, jeff... only seen non-arms length in family include the gift of equity"
Jeff Fullmer : "Thanks Matt, There is no gifting. It's a full offer. Son has his own Down Payment, Son will use as investment also."
Matt Hodges : "that sounds correct jeff. i've only done OO, but i believe NOO are restricted when gift of equity is involved"
Jeff Fullmer : "I have customer that wants to sell his Investment property to his Son. I'm being told that Fannie and Freddie will not allow a Non-Arms-Length purchase of NOO. Any insight or experience with htis situation?"
Victor Burek : "it definitely starts over"
JCC : "It's very unclear it states as long as the borrower has been paying mip for five years"
Steve Chizmadia : "Starts over"
JCC : "If you streamline an FHA does the 5 year start over? or is it from the original date if he reaches 78%"
Rob Clark : "REPRICE: 12:01 PM - Provident Funding Better"
Steve Chizmadia : "Jason just closed a DU deal at 49.97, so yes, they are"
Matt Hodges : "anyone know if DU is still going to 50% dti on strong files? i can't run my current one yet."
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