MBS MID-DAY: Weaker Data Helps MBS Bounce Back
By:
Matthew Graham
•
MBS Live: MBS Morning Market Summary
Bond markets began the day in moderately weaker territory. Overnight Treasuries remained in a narrow range but like MBS, moved to the day's weakest levels in the first half hour of the domestic session. Industrial Production at 9:15am, while stronger at the headline level, was weaker almost everywhere else except for in the Utilities sector. It's questionable that bond markets even reacted to this report, but either way, 10yr yields continued to hold a ceiling at 2.52. 10am Pending Home Sales data saw a bit more of a reaction as the series posted it's first year-over-year decline in 29 months. Positive reaction aside, Friday's range continues to hold for both MBS and Treasuries. They're just nearer the better side of that range.
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.
10:12AM :
Pending Home Sales Continue Slide in September
- Sept PHS -5.6 vs +0.1 forecast
- Sept PHS -1.2 pct year over year
- Market Reaction: Moderately positive for bond markets
Pending home sales declined for the fourth consecutive month in September, as higher mortgage interest rates and higher home prices curbed buying power, according to the National Association of Realtors®. The Pending Home Sales Index,* a forward-looking indicator based on contract signings, fell 5.6 percent to 101.6 in September from a downwardly revised 107.6 in August, and is 1.2 percent below September 2012 when it was 102.8. The index is at the lowest level since December 2012 when it was 101.3; the data reflect contracts but not closings. Lawrence Yun, NAR chief economist, said concerns over the government shutdown also played a role. “Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity,” he said. “In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers’ inability to agree on a budget. A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases.”
- Sept PHS -1.2 pct year over year
- Market Reaction: Moderately positive for bond markets
Pending home sales declined for the fourth consecutive month in September, as higher mortgage interest rates and higher home prices curbed buying power, according to the National Association of Realtors®. The Pending Home Sales Index,* a forward-looking indicator based on contract signings, fell 5.6 percent to 101.6 in September from a downwardly revised 107.6 in August, and is 1.2 percent below September 2012 when it was 102.8. The index is at the lowest level since December 2012 when it was 101.3; the data reflect contracts but not closings. Lawrence Yun, NAR chief economist, said concerns over the government shutdown also played a role. “Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity,” he said. “In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers’ inability to agree on a budget. A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases.”
9:22AM :
ECON: Industrial Production/ Capacity Utilization Both Higher Than Expected
- Industrial Production +0.6 vs +0.4 forecast
- Capacity Utilization 78.3 vs 78.0, highest since 2008
- Improvement led by Utilities
- Market Reaction: bonds were just weakening a bit heading in to the data, and the release didn't do much, if anything to change that. Both Treasuries and MBS remain inside the morning's previous range
- Capacity Utilization 78.3 vs 78.0, highest since 2008
- Improvement led by Utilities
- Market Reaction: bonds were just weakening a bit heading in to the data, and the release didn't do much, if anything to change that. Both Treasuries and MBS remain inside the morning's previous range
8:56AM :
Bond Markets Slightly Weaker At the Open
Treasuries and MBS notched lower in price at the CME open at 8:20am--a time of day where more market participants are beginning to trade Treasury futures. Fannie 3.5s moved 3 ticks lower to 102-18 and Treasuries moved roughly 1bp higher in 10yr yields to 2.52. Both remain just inside last week's weakest levels, but have stabilized just a bit with MBS up to 102-19 and 10's down to 2.518.
Treasuries had a fairly uneventful night before that, trading a narrow range from 2.51 to 2.526. Asian hours were mostly negative and European hours countered the losses almost perfectly.
Today is lighter than most of the week in terms of economic data and events, but there are a few reports. Industrial Production for September leads off at 9:15am followed by Pending Home Sales at 10am.
Treasuries had a fairly uneventful night before that, trading a narrow range from 2.51 to 2.526. Asian hours were mostly negative and European hours countered the losses almost perfectly.
Today is lighter than most of the week in terms of economic data and events, but there are a few reports. Industrial Production for September leads off at 9:15am followed by Pending Home Sales at 10am.
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 : "i would say technically, probably yes, but your investors/lenders are probably just like mine, and will reprice evereything at the same time, not just VA/FHA or conventional seperate, so I would jsut generally watch the normal FNMA 3.5, of course looking at the GNMA 3.5 will probably give you a good indicator as to how much a reprice is coming, whether larger or smaller than a FNMA"
Dustin McAlister : "MG - do a lot of va loans, should i be watching the 3.5% GNMA 30 year currently since 3.75% is the prevelant rate?"
Matthew Graham : "RTRS- U.S. SEPT PENDING HOME SALES INDEX -5.6 PCT, BIGGEST DROP SINCE MAY 2010 (CONSENSUS +0.1 PCT) TO 101.6 -REALTORS "
Matthew Graham : "RTRS- U.S. SEPT CAPACITY USE RATE 78.3 PCT, HIGHEST SINCE JULY 2008 (CONS 78.0 PCT) VS AUG 77.9 PCT (PREV 77.8 PCT) "
Matthew Graham : "RTRS- U.S. SEPT INDUSTRIAL OUTPUT +0.6 PCT, LARGEST RISE SINCE FEB (CONSENSUS +0.4 PCT) VS AUG +0.4 PCT (PREV +0.4 PCT) "
FPH : "Donna: Joe Rash at PNC 1 (267) 210-8042"
Donna McKenna : "I need a commercial contact in Philadelphia "
Ken Crute : "<<< calling penny Mac in 5 min heading to Home Depot in 10 min "
John Rodgers : "PennyMac offering $50 Home Depot gift cards to apply. Wow just wow."
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