MBS RECAP: Uncharacteristically Smooth Sailing For Bond Markets

By: Matthew Graham •
MBS Live: MBS Afternoon Market Summary
Apart from the heavy volume that followed Retail Sales this morning, the day was quiet for Treasuries and especially for MBS.  It's not impossible for these quiet days to result in this sort of drift where prices don't moved down more than 2 ticks before making a new high.  In other words, Fannie 4.0s never lost more than 2/32nds at a time before notching up to their next high of the day.  The only exception was the first half hour of trade which was catching the tail-end of more hurried movements on European news/events.  Domestic traders were just firing up their screens when weakness in German Bunds spilled over into Treasuries.  MBS simply followed the momentum as much as they had to--expecting Retail Sales to either confirm or reject.  It rejected and the rest of the day was worry-free for both Treasuries and MBS.  Big picture implications are limited considering 10's remain in Friday's range.  MBS barely managed to break Friday highs thanks to light supply and a general preference to outperform Treasuries while the latter remains flat.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
96-30 : +0-15
FNMA 3.5
100-22 : +0-14
FNMA 4.0
103-20 : +0-12
FNMA 4.5
105-18 : +0-08
GNMA 3.0
98-03 : +0-21
GNMA 3.5
101-27 : +0-17
GNMA 4.0
104-09 : +0-16
GNMA 4.5
105-28 : +0-12
FHLMC 3.0
96-21 : +0-15
FHLMC 3.5
100-13 : +0-15
FHLMC 4.0
103-12 : +0-11
FHLMC 4.5
105-02 : +0-05
Pricing as of 4:04 PM EST
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.
2:49PM  :  MBS Continue Outperforming Treasuries; Positive Reprices
Smooth sailing and higher prices for MBS make today a welcome exception to the recent rule. The fact that 10yr Treasuries have stayed in a 2.5bp range since 9:30 isn't hurting. MBS may be benefiting from light supply to some extent, but that sort of stability in benchmarks is almost always going to be a net-positive. Since mid June, MBS spreads vs Treasuries blew out into a wide range that has steadily consolidated. Instances of outperformance like today's are part of that longer term process.

It has the happy side-effect of leaving the door open for positive reprices for most of the day. Lenders have been walking through the door as well--some of them several times! That continues to be possible as we head into the last few hours of the day--assuming Treasuries continue staying steady.

In that regard, 10's are currently at 2.55, down around 4 bps on the day and right in the middle of their 2.545-2.57 range. Fannie 4.0s are up 11 ticks at 103-19 and S&P's are continuing their 2nd day spent moderately extending Thursday's all-time highs (i.e. big rally on Thursday, little rallies on Friday and today).
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.
Matthew Carver  :  "REPRICE: 3:49 PM - Flagstar Better"
benjamin levin  :  "REPRICE: 2:58 PM - Wells Fargo (retail) Better"
Eric Franson  :  "REPRICE: 2:11 PM - Wells Fargo Better"
Michael Owens  :  "REPRICE: 1:49 PM - Sierra Pacific Better"
Tom Schwab  :  "REPRICE: 1:37 PM - AMC Better"
Lynn ONeal  :  "REPRICE: 1:20 PM - Franklin American Better"
Rob Clark  :  "REPRICE: 1:07 PM - Provident Funding Better"
Victor Burek  :  "REPRICE: 1:06 PM - Plaza Better"
Lynn ONeal  :  "REPRICE: 12:03 PM - Franklin American Better"
Hamid Hamrah  :  "REPRICE: 11:53 AM - PennyMac Better"
Hamid Hamrah  :  "REPRICE: 11:53 AM - Chase Better"
Hamid Hamrah  :  "REPRICE: 11:53 AM - Stonegate Mortgage Better"
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