MBS MID-DAY: Very Flat and Slightly Stronger
By:
Matthew Graham
•
MBS Live: MBS Morning Market Summary
There is little to be observed about this morning's trading that hasn't already been seen in the first two days of the week. 10yr yields and MBS are both operating well inside the week's established ranges (though Treasuries are at their best levels of any domestic-session hours, only having seen lower yields in Asian and Europe on Monday morning). Europe was a factor for bond markets overnight with BOE (Bank of England) policy helping yields lower and German Industrial Production data pushing back in the other direction. Into domestic hours, US bond markets marched to their own beat, improving despite a more pronounced selling pressure in Europe. Stock prices and bond yields have been quite well-connected, suggesting some asset allocation shifts (money managers adjusting portfolio balance between stocks and bonds). The 10yr Auction is coming up at 1pm and is the next (and last) source of event-based guidance for bond markets today.
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.
9:09AM :
Slightly Stronger After EU-Inspired Overnight Volatility
To be fair to the notion of volatility, what we saw overnight wasn't much at all compared to events like Nonfarm Payrolls or FOMC data, but it was the first time in the past 2 weeks where we see clearly delineated movement and volume that's clearly tied to a specific European event in the overnight session.
Treasuries began flat in Asian hours and moved quickly lower in yield after the Bank of England came out with their own version of tying rates to unemployment in their official policy statement, FOMC Style. The positivity was wholly undone--and then some--by a ridiculously stronger-than-expected Industrial Production number in Germany.
All that might sound a tad dramatic, and indeed it might have been for European markets (UK 10's moved down 5+ bps on the BOE news and up 8bps on the Germany news), but for US Treasuries, it amounted to no more than a 3bp rally and retreat.
Even though core European debt remained at higher yields as we crossed into the domestic session, US bond markets headed back to stronger levels. Treasuries and MBS opened in slightly better shape with Fannie 3.5s up 4 ticks at 100-23 and Fannie 4.0s up 4 at 103-29. 10's are currently down 2 bps at 2.6214.
The only moderately significant economic event arrives at 1pm with the 10yr Treasury Note Auction.
Treasuries began flat in Asian hours and moved quickly lower in yield after the Bank of England came out with their own version of tying rates to unemployment in their official policy statement, FOMC Style. The positivity was wholly undone--and then some--by a ridiculously stronger-than-expected Industrial Production number in Germany.
All that might sound a tad dramatic, and indeed it might have been for European markets (UK 10's moved down 5+ bps on the BOE news and up 8bps on the Germany news), but for US Treasuries, it amounted to no more than a 3bp rally and retreat.
Even though core European debt remained at higher yields as we crossed into the domestic session, US bond markets headed back to stronger levels. Treasuries and MBS opened in slightly better shape with Fannie 3.5s up 4 ticks at 100-23 and Fannie 4.0s up 4 at 103-29. 10's are currently down 2 bps at 2.6214.
The only moderately significant economic event arrives at 1pm with the 10yr Treasury Note Auction.
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 Graham : "yeah, September is no longer a clear consensus. I think markets will decide after the next Jobs report with the preceding few weeks of econ data and FOMC Minutes acting as supporting evidence"
Victor Burek : "me niether"
Michael Gillani : "If it's any consolation, I don't think they will start the taper in Sept."
Scott Valins : "nonetheless, could be a great day to lock"
Scott Valins : "(sadly) less than 50% chance of that happening"
Matthew Graham : "in this environment (sadly), I think any technical victory must come as a result of data that moves the Fed tapering date slider closer to 2014."
Brent Borcherding : "How big it will be Drew, let's remain optimistic."
Mike Drews : "wow..that shows just how big a 2.62 break would actually be."
Matthew Graham : "longer term context for Treasuries: http://screencast.com/t/x9ZEGCpl"
Matthew Graham : "I think I know what you're asking and if so, the answer is "same thing that was going on with the "selling" yesterday, which is to say, "nothing. It's a narrow enough range that it looks like things are happening even when they aren't." Here's MBS through last Monday: http://screencast.com/t/rhH5ivxcFDis"
John Tassios : "MG, what is going on with buying today? not much new data released today."
Mike Drews : "broken?...I'd say pinkie toe in the water."
John Tassios : "I see that OO, I am suprised, this much buying ahead of acution today"
Oliver Orlicki : "titanium floor has been broken...let's keep it up"
Matt Hodges : "JY - actually, my best referral partners are referring fellow agents in their office to me and those deals have been good."
Jason Anker : "JY saved me from typing an answer"
Jason York : "if you are starting new relationships with Realtors, you are probably getting their tough stuff that they took to their preferred lender, who said no, and now they want to send you "referrals" for you to do. Not always, but many times."
Jon Bodan : "FICO is not a huge obstacle for me, normally. My business is all referrals, repeat clients, and realtor/financial advisor referrals. So a lot of my clients are higher score types anyway, but even with lower scores there are investors that will buy the low-FICO FHA business."
John Tassios : "DK, I am in same situation as your comments below, exactly as you worded it. I had a few realtor purchase biz here and there, but majority of my biz was word of mouth, refi's on lower rate dips, and past customer referrals. Now most of that is dried up and with the last refi boom, not many people will move again and lose the 3.5% rate or even have to refi again. So a big chunk of my past business has now dried up and am shifitng to realtor purchase market. I am finding big problems qualifying ne"
Gaius Rossini : "prepayment report was faster than street expectations last night."
Ken Crute : "half of half would be great "
Matt Hodges : "i'd guess 10-25% of that volume, GR"
Ken Crute : "half would be great "
Matthew Graham : "Just a guess, but I'd say most wish we were at half of April's levels"
Victor Burek : "my refi's have dropped by more"
Gaius Rossini : "is that what people are seeing as well?"
Gaius Rossini : "broad question for everyone... the MBA refinance index is about 50% off April-May levels."
William Packer : "Nice little day of green to start.. all before we go back to dancing the taper twist later in September lol"
James Barnes : "Good start this AM"
Matthew Carver : "Flag is pretty solid all around investor, good turn times, decent pricing, great tech on the website. all around soid."
joon choi : "feedback on flagstar corresp"
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