MBS RECAP: Weaker After Data, Stronger After Headlines
By:
Matthew Graham
•
MBS Live: MBS Afternoon Market Summary
The first day back after Labor Day weekend offered a bit of excitement with bond markets on the ropes right from the start. This was primarily a factor of a day and a half of Global market movement for which US traders had been absent and wasn't too terrible for bond markets at first. The more dramatic part of the fight came after the stronger-than-expected ISM Manufacturing numbers, effectively sending MBS and Treasuries to the canvas after 10AM. When headlines hit regarding Congressional support for the President's calls for military action in Syria, stock markets reacted in dramatic fashion. Bond markets on the other hand, took a "slow and steady" approach, grinding back most of their post-ISM losses, but still clearly not even trying to fight back toward Friday's levels.
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.
1:17PM :
MBS Slowly Bouncing Back From Post-Data Lows
Earlier this morning when House Speaker Boehner voiced his support for the President regarding military action in Syria, markets pounced on the headlines. This was mostly seen in equities markets, where the reaction was in the same vein as last week's examples. In short, any headline that suggests more imminent conflict has damaged stocks and only very marginally benefited bonds.
Case in point, S&P's are down over 10 points from the morning's highs, taking them all the way back to August 30th levels. 10yr yields, in contrast are only down to 2.867 from this morning's 2.911, but remain a far cry from the sub 2.80 levels last Friday.
MBS lost a bit less than Treasuries into this morning's weakness and are gain back at a more moderate pace now. Fannie 4.0s are now down only 11 ticks at 102-20 whereas they'd been as low as 102-14 after the ISM data.
For some of the faster-acting lenders, this is grounds for positive reprice risk (one has already repriced). For others, this merely decreases the lingering negative reprice risk.
Case in point, S&P's are down over 10 points from the morning's highs, taking them all the way back to August 30th levels. 10yr yields, in contrast are only down to 2.867 from this morning's 2.911, but remain a far cry from the sub 2.80 levels last Friday.
MBS lost a bit less than Treasuries into this morning's weakness and are gain back at a more moderate pace now. Fannie 4.0s are now down only 11 ticks at 102-20 whereas they'd been as low as 102-14 after the ISM data.
For some of the faster-acting lenders, this is grounds for positive reprice risk (one has already repriced). For others, this merely decreases the lingering negative reprice risk.
11:01AM :
ALERT ISSUED:
Selling Continues; Additional Reprice Risk
Negative reprice risk is incrementally higher than the post-ISM sell-off alert. 10yr yields are several bps higher now, cresting 2.910 and Fannie 4.0s are down 17 ticks at 102-14. All lenders are at some risk of negative reprices now, provided they were out with rates around or before 10:30am.
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.
Jason York : "REPRICE: 11:41 AM - Fifth Third Mortgage Worse"
Victor Burek : "CANTOR SAYS HE WILL SUPPORT OBAMA ACTION IN SYRIA"
Victor Burek : "not sure why ONLY the USA can respond"
Victor Burek : "BOEHNER SAYS UN, NATO UNLIKELY TO TAKE ACTION ON SYRIA"
Victor Burek : "BOEHNER SAYS `ONLY THE UNITED STATES' CAN RESPOND TO SYRIA
"
Victor Burek : "BOEHNER SAYS WILL SUPPORT OBAMA'S CALL FOR ACTION IN SYRIA, BELIEVES COLLEAGUES SHOULD DO THE SAME
"
Victor Burek : "Boehner saved us"
Andrew Horowitz : "major stock reversal btw in case anyone paying attention"
Rob Clark : "Boehner said he supports the president decision to attack Syria. "
Nate Miller : "REPRICE: 11:14 AM - Caliber Funding Worse"
John Tassios : "yes, AQ, good way to look at it "
AQ : "spread product = risk."
AQ : ""RISK ON" trade in action today. MBS = risk."
AQ : "look at swaps too JT. "
Andrew Horowitz : "just remember this day when tsy rally strong and MBS lag and realize the correlation is not always there"
AQ : "MG has mentioned the lack of supply from TBA hedgers. It's really obvious when dealers need to cover a position or a client comes in asking for inventory"
AQ : "intraday supply and demand matters most when discussing TBA basis performance"
AQ : "hedge ratios useless right now JT"
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