MBS MID-DAY: Weaker Early, Stronger After Stock Market Open
By:
Matthew Graham
•
MBS Live: MBS Morning Market Summary
Bond markets made it to the domestic session with yesterday's gains mostly intact, but struggled a bit in early trading. The movement has all been exceptionally docile and is just new edging into positive territory as the whole universe seems to be gradually shedding some risk this morning. That has bond yields and stock prices moving lower in relative lock-step, but the former has a 10yr Auction to consider coming up at 1pm. Yesterday's low yields at 2.18 in 10yr yields pose a significant test, and would likely require a strong auction in order to be convincingly broken.
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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Morning 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 morning.
9:20AM :
Moderate Volatility Overnight; Modestly Weaker Prices So Far
For those of you looking at the 2-day chart on the dashboard, keep in mind that MBS "rolled" last night, so the left pane of the chart is June's pricing and the right pane is July's. The day-over-day price change in the table is accurate at -0-02 ticks for Fannie 3.5s, even though it looks like 12 ticks based on the chart.
Speaking of being down 2 ticks in MBS, that's a good approximation of how most of the morning has been for MBS and Treasuries. 10yr yields traded a narrow range overnight , rising slightly in Asian hours, slightly more in European hours, but then falling to session lows just before the domestic open. The biggest swing took place from 7:20am to present as 10's moved from 2.17 to 2.215 currently.
This relatively fast move leaves 10's in line with their overnight highs and is a minor break above the supportive ceiling that looked like it was taking shape just under 2.21. Some pressure on MBS could follow (and continue) if 10's break overnight highs, but in general, we'd expect volatility to be more of a factor for Treasuries than MBS today, given the 10yr Treasury auction at 1pm (only salient data point of the day).
Speaking of being down 2 ticks in MBS, that's a good approximation of how most of the morning has been for MBS and Treasuries. 10yr yields traded a narrow range overnight , rising slightly in Asian hours, slightly more in European hours, but then falling to session lows just before the domestic open. The biggest swing took place from 7:20am to present as 10's moved from 2.17 to 2.215 currently.
This relatively fast move leaves 10's in line with their overnight highs and is a minor break above the supportive ceiling that looked like it was taking shape just under 2.21. Some pressure on MBS could follow (and continue) if 10's break overnight highs, but in general, we'd expect volatility to be more of a factor for Treasuries than MBS today, given the 10yr Treasury auction at 1pm (only salient data point of the day).
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.
Oliver S. Orlicki : "Chip, I had someone electronically file and it took less than 2 weeks for it validate"
Scott Valins : "Chip I've never seen stamped returns accepted with a 1040X"
Chip Harris : "Anyone know if there is any way to get the IRS to get an amended return marked as received by the IRS so that a lender can verify that with a 4560_t requesting a record of account only? Have a borrower whos CPA gave us an amended return but forgot to mail it until last week. Closing next week and it's a purchase."
philip mancuso : "for the record, i think the hit schedule and gfee increases are way out of line. this vintage is golden. it's stupid some of these hits. i mean 1 point for a 2 fam, even if the ltv is 5%. that's about as dishonest as it gets. the hits should represent risk. oo, 2f, 5 ltv is not risky"
philip mancuso : "i hear you, but they were also supposed to stop charging tolls on the garden state parkway when it was paid for. about what, 30 years ago. they find a way, just saying"
John Rodgers : "Subsequently, there has been an accelerated
deterioration of market conditions: historically high home price declines (third quarter 2007
home prices decreased 4.5 percent year-over-year based on the S&P/Case-Shiller® Home
Price Indices), 20-year high levels of unsold existing single-family housing inventory and
additional widening of mortgage spreads – all have impacted the cost of capital and further
tightened liquidity. In response to the current market volatility, Fannie Mae is taking
"
Ira Selwin : "JR - what is the true definition of "adverse market""
Matthew Graham : "the first "MBS LIVE UPDATE" of the day is almost always addresses what I think will be common questions in the morning. Today's first paragraph: "For those of you looking at the 2-day chart on the dashboard, keep in mind that MBS "rolled" last night, so the left pane of the chart is June's pricing and the right pane is July's. The day-over-day price change in the table is accurate at -0-02 ticks for Fannie 3.5s, even though it looks like 12 ticks based on the chart.""
David Rudnick : "dont get this..... how are we down 4 on the mbs if we left off at 3-13 (fannie 3.5)"
John Rodgers : "New Stream talks about properties returning to postive equity and USA Today had a cover story about it. What more info does Fannie need in order to remove the Adverse Market fee? "
Matthew Graham : "RTRS- REUTERS POLL-U.S. NON-FARM PAYROLLS SEEN GAINING AVERAGE 163,000 A MONTH IN Q2 (UP FROM 162,000 IN MAY POLL) "
Matthew Graham : "RTRS - 40 OF 44 ECONOMISTS SAY FED VICE CHAIR JANET YELLEN WILL TAKE OVER FOR BERNANKE NEXT YEAR "
Michael Ullmann : "I took the UST in April, it took me 15 minutes. It's a very simple 25 question test"
Oliver S. Orlicki : "any feedback?"
Oliver S. Orlicki : "anyone taken the UST test?"
Matthew Graham : "Oh Scotty... You gotta post a glossary after that next time. UST = Treasuries. Higher = lower in yield. Buying = lower in yield (usually, but more complicated than it sounds). Real Money = Banks, Insurance Funds, Unleveraged Accounts generally buying for the longer term. Long Bond = 30yr Bond. Buyback = Scheduled fed Treasury purchase. Hump of curve = 10-15yr maturities in this case."
Scott Rieke : "Here's a little UST morning color for you folks: The market is opening slightly higher than the closing levels after a big reversal off the lows during yesterday’s session. We generally saw better buying from real money accounts in the backend and the long bond was the best performer. Overnight the flows were more muted but we still observed small buying in intermediates. The sessions remain volatile and choppy. Today we have a light data docket but we have a buyback in the hump of the curve"
Jeff Anderson : "GM, all. That was the monthly roll. About 10 ticks. No affect to pricing."
William Hansen : "Is the red right for the close yesterday? I thought we closed in green across the board for the MBS "
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