In the same way that Doc Holiday said "that is a hell of a thing for you to say to me" in the Movie Tombstone, it's a hell of a thing for me to say the impact of the jobs report was lost in the big picture on a day where MBS rallied a full point. This isn't an attempt to be dismissive of strength that may well prove to have some staying power, but it IS a reminder that the negative volatility that preceded today makes today's positive volatility a wash--not only in the bigger picture but even as recently as yesterday morning. Not only are we back in line with yesterday morning's levels, but we're not making any headway in the bigger picture. Here are a few ways of looking at that:
Admittedly the MBS chart is looking more promising than the Treasury chart, but the point is that both have merely returned to "something they were doing before." For MBS, that's struggling to break meaningfully above 104 in Fannie 4.0s (and the upcoming roll will make that harder) and for 10's it's the ongoing inability to get through the uptrend that began in May.
The hope was that a decently sized miss in today's data would have thrust 10yr yields decidedly below the teal line in the chart above (also implying a similarly convincing break above 104-00 for Fannie 4.0s). Instead, we're left with a jobs number that was just weak enough to cause just enough of a rally to create a 50/50 split in the consensus on Fed tapering between December and September (Reuters primary dealer survey). The neutral trading levels are simply reflections of this indecision with a shift toward December favoring the breakout we're looking for and toward November favoring the holding of recently troublesome trends.
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 4:05 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.
3:26PM :
Holding Gains After Treasury Close; Positive Reprices
It continues to be the case that the bulk of today's trading activity was accomplished before 9:20am for bond markets. This is more true for Treasuries vs MBS where the latter were more liquid from 10-noon. The small amount of movement seen since then, has been positive with Fannie 4.0s rising from 103-26 to 103-29 without much overrun in either direction.. 10's glided below the 2.62 technical zone into the 2pm hour and are currently at 2.606 after the 3pm pit close.
Several lenders have repriced positively as MBS (and Treasuries for that matter) have retained their improvements in the sometimes-uncertain 3pm-5pm time frame. Granted, there's more time left until we get to the end of that, but it's incredibly unlikely that something significant happens between now and then.
Live Chat Featured Comments
Nate Miller : "REPRICE: 3:30 PM - Caliber Funding Better"
Charles Tadros : "REPRICE: 2:56 PM - Plaza Better"
Nate Miller : "REPRICE: 2:51 PM - Green Tree Better"
Matthew Graham : "Andrew, I'm not sure if I understand your question. The price on 4.5 30's is higher because there's an actual market for 4.5 30's where there is none for 4.5 15's. There is a market for the lower-coupon 15's, which is why the prices are higher compared to 30's in 3.0 and 3.5 coupons. "
Thomas Nelson : "REPRICE: 2:38 PM - NYCB Better"
Michael Tadros : "REPRICE: 2:36 PM - Provident Funding Better"
Hugh W. Page : "Pimco's El-Erian: http://www.businessinsider.com/el-erian-4-takeaways-from-jobs-report-2013-8 "While the two political parties are putting a different spin on the latest job report, they should both internalize a simple message: the economy is not strong enough to absorb another self-manufactured blow from Congress – be it a renewed debt ceiling saga or a government shutdown.""
Andrew Haynes : "because the 4.5 15 coupon is lower than 30 year. does this mean more demand for higher yielding 15 years than 30 years?"
Matthew Graham : "RTRS- FED'S BULLARD SAYS THAT DESPITE HIS CONFIDENCE IN OUTLOOK FOR US ECONOMY, HE STILL WANTS TO SEE THE EVIDENCE OF THE UPTURN IN THE DATA "
Matthew Graham : "RTRS- FED'S BULLARD SAYS US CORPORATE SECTOR IS IN GOOD SHAPE, COULD SEE A LOT OF INVESTMENT EMERGE IF THE ECONOMY WAS TO 'REV UP' "
Ted Rood : "Exactly. Having different pricing tiers in same shop for different originators is bad enough, but doing that AND then point banks or "bonuses" is flat out violation."
Michael Ullmann : "not to knock anyone but there are a ton of shops out there that say "Ill pay you 100 or 150 bps if you build in 2.5 or 3, but anything above that Ill split and bonus you out next quarter. Its not legal but its common practice. As a retail shop I don't have that kind of arrangement because my pricing has the spread built in, but I have a ton of friends in different states who have this kind of deal. "
Ted Rood : "Agree on the practice, MU.....but still interesting that CFPB could go after originators. You'd think if they were inclined to, C&C would have been the place to start since some LO's got bonuses and others didn't."
Matthew Graham : "RTRS- FED'S BULLARD SAYS WOULD HAVE TO "BLIND" NOT TO SEE BENEFITS OF ASSET BUYING FOR US ECONOMY "
Matthew Graham : "RTRS- FED'S BULLARD, CITING MORTGAGE BACKED BONDS, SAYS INTENT OF FED IS TO HOLD ASSETS ON ITS BALANCE SHEET FOR LONGER "
Michael Ullmann : "TR: I am a few hours late but what was your take on Chrisman's point about LO comp plans and part of the liability falling on LO's. I understand it that in theory an LO can be held accountable. But as a matter of practice the liability falls on the lender."
Ted Rood : "they prob held back parts of gains to see if they would last."
Christopher Stevens : "these reprices are interesting as market is pretty much the same as when sheets were issued"
Kent Hofferber : "REPRICE: 11:53 AM - Wells Fargo Better"
Ira Selwin : "be careful with hosting yourself. need to make sure you have disaster recovery in remote locations"
Lynn ONeal : "REPRICE: 11:35 AM - Franklin American Better"
DK : "now i just way 16 bucks a month per user for point. and havent had a problem in 4 months"
DK : "my brother is a IT guy so he set up a 400 dollar server for us and got it all wired..."
DK : "i called encompass and I stopped after getting their price. Thing about point, is that if you host it yourself the cost is WAY cheaper"
Matt Hodges : "used point for years - it's flexible"
Steven Stone : "much cheaper than encompass DK?"
DK : "Hey Steve, I did this search recently too... I think Point server is still the best bang for your buck for a smaller company. but tell me what you find. "
Christopher Stevens : "REPRICE: 11:29 AM - Chase Better"
Ted Rood : "Mortgage Builder is OK, but seemed like it was harder to master than Point. No idea on the cost aspect."
Steven Stone : "i.e. encompass, open close, calyx, etc"
Steven Stone : "heres my question of the day: whats the best LOS? Also, whats the best VALUE LOS?"