MBS RECAP: Another Hopeful Morning Dashed by Defensive Reality
By:
Matthew Graham
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MBS Live: MBS Afternoon Market Summary
Bond markets got in this morning and quickly began undoing some of the damage done by the overnight trading session. Treasuries and MBS both opened flat to slightly stronger and made further gains in the first few hours. This was soon revealed to be the same old set-up we've seen play out frequently since May 3rd. It usually ends with things starting to get slippery after 10am and drifting sideways-to-weaker in the afternoon. Today was no exception. 10yr yields ran into a floor that had been paved over on Friday after the Consumer Sentiment data. Before that, it had been a ceiling, providing a good bounce before the Friday afternoon drift took over. After bouncing there today, it was all over for 10's and MBS alike. The former moved quickly from 1.92 to 1.975 and MBS dropped from 102-24 in Fannie 3.0s to 102-10 over the same time period. Both drifted sideways since then and are heading out the door near their lows of the day. Tomorrow's a toss-up, being the last day before Wednesday's potentially enlightening FOMC Minutes. There's temptation to think (or 'hope') that we've seen enough selling to stabilize, but technicals leave room for one additional push into weaker territory before Wed's main event.
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.
12:12PM :
ALERT ISSUED:
If You Haven't Seen A Reprice Yet, You Probably Will
In the interest of leaving nothing to the imagination and no doubts about reprices being guaranteed, they're pretty much guaranteed at this point. Some lenders might be coming around for a second pass. That's uncommonly awful at this time of day, but wait, it gets even worse!
MBS are now decisively into their lows of the month, making the bigger picture looks like more of a downtrend than a horizontal 'ground-holding at the lows." Braoder bond markets are trending negatively on the day, so it could get worse before it gets better. After 1.972, the next support for 10's is at 1.984. If we break that, things get substantially more ugly (probably).
10's are currently at 1.970 after having hit 1.975 moments ago. Fannie 3.0s are down 6 on the day at 102-10+.
MBS are now decisively into their lows of the month, making the bigger picture looks like more of a downtrend than a horizontal 'ground-holding at the lows." Braoder bond markets are trending negatively on the day, so it could get worse before it gets better. After 1.972, the next support for 10's is at 1.984. If we break that, things get substantially more ugly (probably).
10's are currently at 1.970 after having hit 1.975 moments ago. Fannie 3.0s are down 6 on the day at 102-10+.
11:33AM :
ALERT ISSUED:
Negative Reprices Reported, More Possible, But Not Guaranteed
Fannie 3.0s dipped into the the lows of the day/week/month/quarter by half a tick and the first negative reprice of the day just came in. If we hold here, reprices continue to be possible for most, and probable for some. Breaking any lower would tilt the scales toward "probable for most." We're currently down 3 on the day at 102-14. 10's are up just above unchanged levels to 1.956.
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.
Nate Miller : "that's the 2nd from Caliber"
Nate Miller : "REPRICE: 3:51 PM - Caliber Funding Worse"
Matthew Graham : "I think something along those lines MH, yeah. Depending on the tone and the particulars, there's room for further weakness in bond markets, but if tapering talk is utterly absent or flat out dismissed, room for improvement. "
Matt Hodges : "MG - to clarify.... tapering comments = status quo. consistent QE purchases through established benchmarks = rate improvements later in the week?"
Matthew Graham : "Evans has consistently been the most dovish FOMC member when it comes to QE, and here he is saying he's open minded to discussing adjustments to the pace. If markets moved at all on these wires, it was barely noticeable. That seems to suggest markets are roughly in the position they wanted to be in to account for tapering to come up in Fed Minutes on Wednesday."
Matthew Graham : "RTRS- EVANS:WOULD BE OPEN-MINDED ABOUT DISCUSSING ADJUSTMENTS TO PACE OF BOND BUYING AT THIS MEETING, OR NEXT, OR THE ONE AFTER "
Roger Moore : "REPRICE: 3:01 PM - Quicken Loans Wholesale Worse"
Rob Clark : "REPRICE: 2:14 PM - Provident Funding Better"
Chris Kopec : "Agreed Ted....after all, much more important to listen to non-voting minority hawk than a voting majority dove."
Ted Rood : "Clearly no one is paying attention to Mr Evans at the moment."
Matthew Graham : "RTRS- EVANS: POSSIBLE FED COULD KEEP RATES LOW EVEN AFTER UNEMPLOYMENT FALLS BELOW 6.5 PCT, IF INFLATION REMAINS LOW "
Brent Borcherding : "I think late 2014, may be realistic if the dynamite doesn't go boom."
Matthew Graham : "RTRS - EVANS: INFLATION IS REALLY QUITE WEAK, AND WOULD LIKE TO SEE IT CLOSER TO OUR OBJECTIVE OF 2 PCT "
Matthew Graham : "RTRS- EVANS: CONFIDENT FED HAS THE RIGHT ACCOMMODATION IN PLACE, EXPECT SELF-SUSTAINING RECOVERY BY 2014 "
Nate Miller : "REPRICE: 1:13 PM - Caliber Funding Worse"
JRS : "REPRICE: 1:12 PM - USBank Worse"
Scott Valins : "REPRICE: 1:10 PM - Cole Taylor Worse"
MortgageMan007 : "REPRICE: 1:09 PM - Fifth Third Mortgage Worse"
MortgageMan007 : "REPRICE: 1:09 PM - Interbank Worse"
MortgageMan007 : "Dang IB took a .25 way on a lot of programs...."
Victor Burek : "REPRICE: 12:32 PM - Plaza Worse"
Bryan LaFlamme : "REPRICE: 12:03 PM - 360 Mortgage Worse"
Rob Clark : "REPRICE: 12:01 PM - Provident Funding Worse"
JRS : "REPRICE: 12:01 PM - Stonegate Mortgage Worse"
JRS : "REPRICE: 12:01 PM - Suntrust Worse"
JRS : "REPRICE: 12:00 PM - Franklin American Worse"
Roger Moore : "REPRICE: 11:56 AM - NYCB Worse"
Christopher Stevens : "REPRICE: 11:50 AM - Wells Fargo Worse"
Jeff Anderson : "REPRICE: 11:48 AM - Chase Worse"
Justin Dudek : "REPRICE: 11:46 AM - Everett Financial Worse"
Scott Rieke : "REPRICE: 11:40 AM - BB&T Worse"
Matt Hodges : "10:58 warning from MG - gotta love this site"
Christopher Stevens : "REPRICE: 11:27 AM - Flagstar Worse"
Steven Stone : "yeah we keep getting clocked"
Christopher Stevens : "market is like clock work the last few sessions. "
Bert Swyers : "its becoming a 10 part mini series"
Hugh W. Page, M.B.A. : "I've seen this movie before and I don't like the ending...."
Bert Swyers : "here comes the red"
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