MBS RECAP: Surprise Surprise, Another Big Nasty Sell-Off

MBS Live: MBS Afternoon Market Summary

There's little left to say about today that hasn't already been said in the earlier MBS MID-DAY. As that post notes, seeing bond markets take a "lead-off" outside the existing pre-NFP range is no surprise at all today, even though the telegraphed nature of the move doesn't make it any more palatable.  In other words, this is the kind of thing that you know will probably happen, but you hope it won't.  The remembered clarity of one's crystal ball is of little solace after the bumps in the road leave it shattered. 

Tomorrow remains as important as it ever was in casting the last vote on Fed tapering prospects before the September 18th Announcement. 

Until NFP is out, market participants still have to account for the prospect that it could be horribly weaker-than-expected.  Thus, if it's not weaker than expected, when unburdened with the need to account for multiple outcomes, rates can naturally move even higher.  They can move lower on weaker data as well, but it will take extreme weakness to make a noticeable long-term dent in the trend.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

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.

3:57PM  :  ALERT ISSUED: Yet Another Leg Down Into Equities Close; More Reprice Risk

12:01PM  :  ALERT ISSUED: MBS Sell-Off Approaching Ludicrous Speed; More Reprice Risk

11:01AM  :  ALERT ISSUED: Negative Reprices Are a Constant Risk

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.

Paul L. Martin  :  "Agree MG. Rates are rising for the wrong reasons...No income growth, savings is less, stagnant job market, lots of uncertainty regulatory and global uncertainty. The rise in rates is not becaue of 'healthy reasons', but beacuse of market manipulation by Central Bankers and the Traders who move markets."

Bryce Schetselaar  :  "Seems to me that inventory would just build up and that home prices would stay close to the same."

Michael Gillani  :  "It's also affordability. If milk goes from $3 - $6 gallon and you have a great job, earning good money and you are not finically strapped, you aren't going to stop buying milk because of the higher price. You may be upset, but it won't stop you from doing it. Now if you're barely earning enough money to buy it at $3 gallon and your job is part time and you're afraid of getting laid off and there are no raises in sight, the higher price will probably have a much bigger impact on the purchase o"

Jason Anker  :  "rate is starting to kill purchase deals and that concerns me"

Jason Anker  :  "yea 5.875 was amazing when most getting into it were at 6.5 or 7. Gettign to 5.875% again now would be deadly"

Christopher Stevens  :  "I think if rates head north of 5% the taper would be more concentrated on treasuries not MBS (IMO)"

Matthew Graham  :  "it's always a possibility that we see a pre-NFP "lead off," which is why I use the term and warn against it (especially against this Thursday as it had ADP relocated). "

Jeff Anderson  :  "Didn't we get similar action before last month's NFP?"

Matthew Graham  :  "TN, that was a prevalent complaint in early May"

Thomas Nelson  :  "These early moves wreak of insider trading."

Nate Miller  :  "yep just locked one at this mornings price, can only see things getting worse."

Ted Rood  :  "It's the warm up for tomorrow."

Christopher Stevens  :  "was not expecting this move today"

Jeremy Bittner  :  "when does the pain stop?"

Chris Kopec  :  "Sounds kind of cheesy, but the higher rates go, the less high they will continue to go (feel free to throw the vegetables now)."

Jason York  :  "I'm kind of the same way EG, most of my customers, I tell them when to lock, and I think we should be doing that as their mortgage professional, they know they can trust me to make the best decision for them"

Erik Grimmer  :  "i just lock my people.....and dont ask them what they want....they are often clueless. j/k"

Adam Dahill  :  "Ughh this stinks. I called 3 client yest and begged them to lock. didnt' liten"

Matthew Graham  :  "I think PART of the visceral incongruousness owes itself to the magnitude of the deleveraging and pervasiveness of that "recession feeling" well past the point at which market metrics began to turn. Not sure if that makes sense as worded, but I'll think of a better way to say it."

Ray J  :  "interesting chart MG"

Amitab Mukerjee  :  "Day to day morale shifts haven't occurred yet form where I'm standing"

Amitab Mukerjee  :  "TY: Right. But something viscerally does not jive with the thought that the market is improving. Maybe there needs to be a threshold past which we start to intuitively feel the improvement."

Matthew Graham  :  "I know some of you can't open screencast, so let me know if this works instead: http://tinyurl.com/mxqd9yh"

Matthew Graham  :  "the lynchpin of the explanation is this: QE "compressed" the green circle patterns seen in 93 and 98. The key elements are the same though: drop to generational lows, consolidate, drop more and relatively abruptly, rebound and consolidate before reaching first consolidation at point "1," and ultimately sell-off to 5yr moving average, consolidate again with a negative bias, break higher and then do whatever the heck you want."

Matthew Graham  :  "The main reason I didn't post this is the sheer volume of explanation it would require. There was no way I could have done it and kept it relevant and tangible (still no way, but here's the chart anyway, in case you want to try to viscerally understand that which I am unable to explain) http://screencast.com/t/MAcj7qu6 (this was on Tuesday night, so obviously, we've already entered the yellow circle area."

Matthew Graham  :  "There are several ways to approach it. I think I have a chart that I didn't publish yesterday that has a sort of quantum model implication for a range of yields that has a certain percentage chance of occurring some time soon. All based on past performance though, and I'm not as much of a fan of history repeating right now as I I have been in the past. Bottom line, 3.0-3.5 through the end of 2013, but the model actually would call for a bounce back below current levels as well (again, past pr"

Erik Grimmer  :  "mg.....where are the technical points on the yields right now?"

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