MBS RECAP: Moderately Weaker Day, Guarded Against More
By:
Matthew Graham
•
MBS Live: MBS Afternoon Market Summary
Bond markets began the day in weaker territory after Monday night's flight-to-safety demand steadily dried up overnight. The domestic session was greeted with Fannie 3.0's roughly 7/32nds lower and 10yr yields roughly 3.5bps higher. Both remained quite close to those weaker levels for the balance of the day, but there was a notable, if mild bullishness in the morning, followed by a more volatile (but still mild) weakness in the afternoon. Economic data had little or no effect on trading levels, which instead ground sideways despite roughly a 10 point gain in the S&P. We're either witnessing pure indecision in bond markets or an ongoing struggle with resistance levels around 104-07 in MBS and 1.70 in 10yr yields (tested as a pivot point around 5am in overnight trading). It's too soon to say for sure, but the risk is that this struggle is part of a double bounce at the strong levels seen just after the Employment Situation report the week before last. More weakness tomorrow would continue to build that case.
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.
1:10PM :
MBS Head Back To Opening Levels
Without much volume or fanfare, bond markets simply turned the corner just after 11am, and are heading back toward opening levels. For MBS, this merely amounts to a 3 tick drop from the highs of the day at 104-07. Fannie 3.0s are now down to 104-04 and within striking distance of the morning's lows at 104-02.
Considering that early lenders priced around 104-03 and later lenders around 104-05, negative reprice risk is minimal, with the only exception being lenders who happened to reprice positively near the highs.
10yr yields only made it to 1.71 before moving higher to 1.73 currently. Stocks are higher too, but the lever isn't especially connected today. As 10's flirt with the notion of testing the 1.733 technical level we mentioned earlier, MBS seem equally willing to retest their morning lows. We're not quite there yet, but it's a near-term possibility, and one that would increase negative reprice risk for some lenders (either the quickest-to-act crowd, or those who priced closer to 10:30am ET).
Considering that early lenders priced around 104-03 and later lenders around 104-05, negative reprice risk is minimal, with the only exception being lenders who happened to reprice positively near the highs.
10yr yields only made it to 1.71 before moving higher to 1.73 currently. Stocks are higher too, but the lever isn't especially connected today. As 10's flirt with the notion of testing the 1.733 technical level we mentioned earlier, MBS seem equally willing to retest their morning lows. We're not quite there yet, but it's a near-term possibility, and one that would increase negative reprice risk for some lenders (either the quickest-to-act crowd, or those who priced closer to 10:30am ET).
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.
Ryan Kelly : "MG, MBS Live ticker in Costco...... Now we are cooking with peanut oil boys"
Ted Rood : "Yeah, but bet they don't have any MND info at Costco!"
Matthew Graham : "both are commodities in the world of tomorrow"
Eric Schuchaskie : ""Sorry but I got my loan at Costco" Is this the future of our profession. Do people really mix finances and toilet paper together?"
Matt Hodges : "2nd lien holders likely not subject to reg B, chip"
Rob Clark : "REPRICE: 12:32 PM - Provident Funding Better"
Chip Harris : "fixed 2nd"
James Barnes : "We have to send a Notice of Incompleteness if we have not made a decision in 30 days"
Chip Harris : "Just says that a creditor has to notify within 30 days though. Only references that it be in writing when adverse action is taken."
Ben Biscoe : "yes, reg b states a credit decision has to be made within 30 days of application. they are hardcore on that here at wells retail, if we dont submit a file within 10 days of application our branch gets charged a penalty"
benjamin levin : "http://www.bankersonline.com/regs/202/202-9.html"
benjamin levin : "its called reg b"
Chip Harris : "Anyone know where I woudl find the 30 days RESPA rule? Key Bank says there is no such thing and that they never have and never will provide any customer with approval letters or denial letters."
Christopher Stevens : "Mohamed El-Erian on Cyprus http://www.linkedin.com/today/post/article/20130412164534-204274949-cyprus-rescue-from-bad-to-worse?trk=eml-mktg-condig-0108-p1"
Chip Harris : "Guy at Key Bank says he will be fired for providing an approval letter, buth that they are ready to close."
Ted Rood : "it's 30 from app date, I believe, clock doesn't slow down while you're waiting for docs."
Chip Harris : "Key Bank is refusing to give my referral anythign other than a "terms of loan". 1st lender won;t take that. They want an approval letter."
Matt Hodges : "chip - i thought decision in 30 from signed docs"
Chip Harris : "What is the time line in which a loan decision must be given to a borrower? Is it 60 days per RESPA?"
Gus Floropoulos : "open red close green, very bullish if it happens"
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