MBS RECAP: Bond Markets Seek Neutrality Ahead of NFP
By:
Matthew Graham
•
MBS Live: MBS Afternoon Market Summary
For all the data and events digested by bond markets today, trading levels managed to stay fairly calm and to seek out the neutrality of recent ranges. For 10yr yields, that 'recent range' is twofold. The wider range is roughly 2.74 to 2.47 with both getting a visit in October and many more in June, July, and August. The narrower range is that which prevailed during most of the "wait and see" moments of the government shutdown, stretching from 2.59 to 2.67. It translates mostly to 101-18 to 102-06 in terms of Fannie 3.5 MBS.
With the weakness seen at the end of last week, both MBS and Treasuries returned inside the narrower range and both were able to hold their respective ground before breaking any weaker (10's up over 2.67 and MBS, below 101-18). After today's improvement, they've moved closer to the other end of the range. In so doing, they've opted to stick to the most central zone of broader range that's well-enough traveled as to justify more volatility than we're seeing. This suggests they're ready to move quickly to either side of the longer-term range after tomorrow's NFP, though they're more likely to fizzle well before making it to those relative extremes.
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.
11:39AM :
Bond Markets Back to Best Levels After Fed Buyback
Unlike important economic data that can noticeably correlate with bond market movement, we're currently seeing more secretive sources for this mid-day rally. The most likely suspect is the swift correction in 30yr bonds surrounding the Fed's scheduled 30yr buyback from 10:15 through 11:02am. Click over to the 30yr chart to see just how much they're leading 10's today.
There's also news of think tank report making rounds among market participants suggesting that the Fed threshold news of the past few days is grossly overdone and that the papers that started the speculation were in the works for quite some time. This one's a bit more of a stretch, but it could be contributing.
Finally--and on the most substantive note--big block trades came through the CME just before the end of the Fed buyback and coincided with 10yr yields turning the corner at 10:53am.
10's rocketed lower from 2.635 to 2.598, but are already back up to 2.611. That's not too shabby if we hold there as it's in line with the best levels from earlier this morning. MBS merely approached their best levels with Fannie 3.5s rising to 102-02 but currently back down to 101-31+.
The gains are still fairly young, but if they stick around at current levels, a few lenders may consider positive reprices.
There's also news of think tank report making rounds among market participants suggesting that the Fed threshold news of the past few days is grossly overdone and that the papers that started the speculation were in the works for quite some time. This one's a bit more of a stretch, but it could be contributing.
Finally--and on the most substantive note--big block trades came through the CME just before the end of the Fed buyback and coincided with 10yr yields turning the corner at 10:53am.
10's rocketed lower from 2.635 to 2.598, but are already back up to 2.611. That's not too shabby if we hold there as it's in line with the best levels from earlier this morning. MBS merely approached their best levels with Fannie 3.5s rising to 102-02 but currently back down to 101-31+.
The gains are still fairly young, but if they stick around at current levels, a few lenders may consider positive reprices.
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.
Tim Yazawa : "what determines the forecast for NFP? a panel of economists? "
Timothy Baron : "I'm playing defense, and recommending locking today. It just seems like there is more risk potential than reward potential tomorrow morning."
Justin Harward : "or better yet, what your clients tell you"
Tim Yazawa : "its a gamble, do what your gut tells you to do. "
Kunal Khanna : "Anyone locking today instead of waiting for NFP?"
Victor Burek : "conventional requires 4 years, so you should be good with any lender"
RYAN GEORGE : "Looking for a lender 77LTV, 680 credit, Ch 7 bk discharged nov 2009"
Ted Rood : "Alliant will do that, I do believe."
David Silvernail : "Looking for a jumbo lender for 85 ltv second home purchase with loan amount of 600K. "
Andy Pada : "in our 30 year history, the borrower losing a job was never an occurrence. in 2013, we have had at least 8 instances."
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