Today was a fairly jarring and brutal ride for bond markets--a true example of the sort of volatility that we often consider, but seldom see on data-free Fridays with big technical levels nearby. In today's case the nearby technical levels were well laid out in the the 'day ahead' post (and the charts were available on MBS Live's dashboard last night). The following chart is an updated version of 2 of this morning's charts showing that break of 1.84 quickly resulting in the battle around 1.90 in 10yr Treasuries, and the breakout attempt from the long term range being called into serious question. In it's simplest form, today could be explained solely by the technical considerations in that blog post, but there were fundamental considerations as well, including the pent up selling demand left over from yesterday's inability to get to low enough yields to "distribute" the auction supply just picked up by dealers over the past 3 days (accounts buy at auction. If rates go down, prices go up, enabling a quick potential profit). Profit potential was quickly dashed as Bernanke offered no insight for bond markets this morning. From then on, the infamous 'snowball selling' took over.
How you look at this is largely a matter of perspective... One one hand, the first quarter of 2013 was "overdone" in terms of selling pressure and we're merely testing that 1.84 ceiling again (albeit, by an uncomfortable margin). On the other hand, the month of April was "overdone" and we're getting back in line with the trend. Or it could be somewhere in between, and much in the same way that bond markets may have been in a slightly too aggressive position heading into the last NFP report, so too could we be rushing to get in position for a better-than-expected Retail Sales report on Monday. That third option is the quickest revelation as an unchanged or weaker report will see us quickly shuttled back down into the 1.8's.
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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Pricing as of 4:08 PM EST
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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.
11:44AM :
ALERT ISSUED:
Bad To Worse. Selling Now Matches Last Friday's
1.90 technical level in 10yr yields offered no supportive ceiling and we're right through to 1.92's now. Fannie 2.0s are now down as much as they were on NFP day-- 21 ticks lower ON TOP OF the roll, making for a full point drop to 103-01.
Simply being down by an equal amount doesn't really do justice to the sell-off though. This one's not good at all. It comes not as a springy bounce back of recent highs, but in the midst of an already-downward trend, AND smack dab on super long term, super important technical inflection points in Treasuries, and in the highest volume by this time of day we've ever seen without a big-ticket event to drive it. All tradeflows.... The
"Danger Zone" referenced this morning was an understatement. If you haven't seen a reprice yet, and your lender is out with rates, there's almost no chance you won't see a reprice if you haven't already.
11:00AM :
ALERT ISSUED:
Probably More Like "Not If, But When" For Reprices
Any lender that took down marks before 10:21am is already down 6 ticks. Earlier lenders are worse off. All those rate sheets are at risk of negative reprices.
Big nasty distribution sell-off following auctions, plus technical correction after crossing 1.84 in 10yr yields. Short term selling snowballs got big enough to bring longer term money in as a seller. Volume is out of control high. 10's are gonna crack our 1.90 target in a few seconds and MBS are down almost half a point. It's getting ugly.
Live Chat Featured Comments
Tom Schwab : "REPRICE: 12:23 PM - USBank Worse"
Sam : "REPRICE: 12:19 PM - Freedom Mortgage Worse"
Ira Selwin : "REPRICE: 12:19 PM - Chase Worse"
Matthew Graham : "Raises an opportunity for a reminder to the relatively high amount of new members today: If you click "Reprice Log" at the top of the chat window, you can see a log of which lenders have repriced today, as reported by our members."
Nate Miller : "REPRICE: 12:17 PM - Caliber Funding Worse"
Daniel Kramer : "worse by 70 bps since yesterday last rate sheet"
Daniel Kramer : "REPRICE: 12:15 PM - Fifth Third Mortgage Worse"
Matthew Graham : "REPRICE: 12:04 PM - Plaza Worse"
JRS : "Come to the dark side. We have cookies. "
mike prozy : "Holding my cheeks....."
Oliver S. Orlicki : "just saw a green flash...."
Matthew Graham : "ok, for anyone who missed the chart, http://screencast.com/t/0TJbCJ1WEH"
Matthew Graham : "Another technical pattern just popped up on 10's. Credit goes to Ted Rood for the analysis, and yeah... I'm not leaving this up there, but those of you tuned in can get a laugh for a minute or two..."
Gus Floropoulos : "REPRICE: 11:52 AM - PHH Worse"
Gus Floropoulos : "we all know the cracks in the foundation are still there"
Victor Burek : "and we get to have the fun of rallying back"
Gus Floropoulos : "actually take it as a net positive that we gave 2 handles back within a week....better it happens quickly than slowly"
Tom Schwab : "FAMC worse AGAIN it looks like"
Tom Schwab : "REPRICE: 11:48 AM - Franklin American Worse"
William Crawford : "For Immediate Release: After an emergency meeting of the board of Governors, BB has announced CFPB's immediate funding of TARP 27, in conjunction with a full retraction of LO comp rules that have been highly scruitinized from within the industry . . . "
William Crawford : "Isn't there some kind of spoof email we can send to bond traders, like the crap buy this penny stock tomorrow AM e-mails I get five times a day?"
philip mancuso : "we're approaching a 2 pt sell off from 5/1. it's a bit much at this point"
Brett Boyke : "unfortunately this is not the room"
Joel Marks : "paint me cynical, but days like today make me think that all this is controlled/manipulated by three rich dudes sitting in a room together."
Christopher Stevens : "my god hold on 103"