MBS RECAP: Mostly Narrow After Minor Morning Volatility
By:
Matthew Graham
•
MBS Live: MBS Afternoon Market Summary
This morning's Retail Sales report was only a small contributor to a sell-off that took it's more meaningful cues both from overnight trading as well as Friday's snow-ball selling. Even before that, the most significant event of the past 2 weeks continues to be the Employment Situation Report on May 3rd, which marked a turning point for bond markets and introduced a massive, negative directional bias that has yet to run its course. The story of that bounce back was compounded last week by a speculative ramp up in FOMC-related uncertainty. The new (old) notion is that the Fed is set to start tightening the screws on QE and even has a plan to do so! The fact that they might have such a framework should surprise no one, but there's some concern that the upcoming 'Minutes' next week could suggest that such tightening is sooner on the horizon. The defensive move--to whatever extent its really based on such fear--is therefor easily dealt with after the Minutes release next Wednesday but may make for volatility in the meantime.
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.
3:17PM :
Exceptionally Sideways After Morning Volatility
The trading day for MBS and Treasuries grew quickly uneventful as prices bounced back following 30 minutes of weakness from 8:30 to 9:00am. After getting back just more than half of the morning's losses, bond markets have been sideways since then and in very narrow ranges.
Nothing has prompted more than 1bp move from peak to trough in 10yr yields or more than a 3 tick move in MBS (3/32nds). Two things are notable about the calm trading , however. First, the support this morning (probably best characterized by a ceiling around 1.94 in 10yr yields) was very much "it's own doing." In other words, it was an organic support level that brought in buyers (or short covering) well before any shift in the broader risk-on/risk-off tide that might be seen in equities.
The second notable development is simply an ongoing refusal on the part of bond markets to weaken any further from their narrow post-10am range despite movement in other markets. That suggests current supports are significant if crossed over night or tomorrow (1.94-ish in 10's and 102-25 in Fannie 3.0 MBS). Narrowness goes both ways though, and 1.915 and 103-01 would be perhaps equally significant lines in the sand. If broken tomorrow, those would suggest some attempt to bounce back or level-off is in the works.
Nothing has prompted more than 1bp move from peak to trough in 10yr yields or more than a 3 tick move in MBS (3/32nds). Two things are notable about the calm trading , however. First, the support this morning (probably best characterized by a ceiling around 1.94 in 10yr yields) was very much "it's own doing." In other words, it was an organic support level that brought in buyers (or short covering) well before any shift in the broader risk-on/risk-off tide that might be seen in equities.
The second notable development is simply an ongoing refusal on the part of bond markets to weaken any further from their narrow post-10am range despite movement in other markets. That suggests current supports are significant if crossed over night or tomorrow (1.94-ish in 10's and 102-25 in Fannie 3.0 MBS). Narrowness goes both ways though, and 1.915 and 103-01 would be perhaps equally significant lines in the sand. If broken tomorrow, those would suggest some attempt to bounce back or level-off is in the works.
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.
Caroline Roy : "dug as opposed to drilled"
Jason Anker : "starts with IF and I guess i just dont need them becuase it's not on any of my commits"
Kent Mikkola #353976 : "the requirement is for Dug Wells, I am not sure what type of well the referring to"
Timothy Baron : "The section quoted from page 7 refers to dug wells. As opposed to drilled wells, ostensibly."
Kent Mikkola #353976 : "the FAQs were revised 1/24/2013"
Kent Mikkola #353976 : "Jason, New construction requirements are the first section of the FAQs... the Utilities section which contains the Well & Septic information is a few pages further in... look on page 7"
Jason Anker : "i can look later but i'm pretty sure HUD handbook does not require a well test neither quality nor quantity"
Jason Anker : "Kent - that link says you need a well test for New Construction. "
Kent Mikkola #353976 : "http://portal.hud.gov/hudportal/documents/huddoc?id=aprval.pdf - page 7 A pump test indicating a flow of at least 3-5 gallons per minute
supply for an existing well, and 5 gallons per minute for a new
well"
Jason Sheaffer : "i just got the oddest email from a realtor...What are the exact FHA guidelines for an EXISTING well when it comes to well flow and pressure?"
Scott Rieke : "So the others can be petitioned prior to 60mo? The manuals aren't really clear on that. Surprise surprise"
Victor Burek : "only fha you must pay for 5 years"
Scott Rieke : "Meaning, if they fall under 78 LTV in 45mo, can it still fall off? Or does it HAVE to last 60mo?"
Scott Rieke : "Question for all - does monthly MI always have to be 60mo for Fannie/Freddie, regardless of LTV? "
Victor Burek : "so better pull by 5/31"
Ted Rood : "Yeah, but 6/1 and 2 are Sat and Sunday....."
Ken Crute : "6/1 for 60 months 4/1 for 1.35 "
B-C : "does anyone know the start date of FHA MIP not terminating after 60 months and ,78 LTV?"
Jason Anker : "2nd MH's response, good tool"
Matt Hodges : "DK - check this out, maybe it helps you: http://law.onecle.com/new-york/banking/BNK06-K_6-K.html"
Christopher Stevens : "REPRICE: 1:51 PM - Chase Better"
Matt Hodges : "CreditXpert on Kroll"
Bryce Schetselaar : "looking for somewhere to estimate improvements to a credit report. Like if this is paid off, credit score will improve by x. Anybody know of a good program/company to use?"
Jeff Statz : "if it's state-specific, it'd be law-related, so I'd talk to a NY RE law atty"
Daniel Kramer : "any one hear of a new rule that says that as of June1 borrowers in NY HAVE to escrow for taxes and insurnace, they wil no longer be allowed to waive this?"
William Hansen : "REPRICE: 12:42 PM - Provident Funding Better"
Lynn ONeal : "yes, they do bryce"
Bryce Schetselaar : "does anyone know if plaza allows electronic signatures on initial disclosures?"
Matthew Graham : "RTRS- FED'S BERNANKE TO TESTIFY BEFORE CONGRESSIONAL JOINT ECONOMIC COMMITTEE ON MAY 22 - COMMITTEE VICE CHAIR "
Jeff Anderson : "How to go out on a limb, Stoney."
Steven Stone : "maybe both"
Steven Stone : "or a bottom"
Steven Stone : "im calling a top"
James Lee : "Any think we've seen the bottom of this valley yet? I know it wont stay here forever but i need a breather!!"
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