MBS MID-DAY: Bonds Improve on Light-Volume Snowball Buying
By:
Matthew Graham
•
MBS Live: MBS Morning Market Summary
Today was destined to to be light on market moving guidance and consequently on participation (to whatever extent anything is destined to happen in financial markets). Most market participants have done what they needed to do for the week, and we're now seeing the low-volume technical trading that all too often makes for afternoon volatility on these data-free Fridays. That volatility frequently works against us, but today it's in our favor. MBS are actually underperforming Treasuries, but Treasuries are doing well enough that MBS are coming along for the ride--albeit reluctantly. The pricing snapshot below is slightly outdated now and Fannie 3.5s have added another 3-4 ticks. Fannie 4.0s aren't as interested in following for reasons that will show up in this afternoon's recap.
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.
9:05AM :
Bond Markets Open Slightly Stronger, Now Back to Unchanged
The overnight session was relatively uneventful for bond markets with 10yr yields hitting lows of 2.772 before pushing not too far up to highs at 2.795 after a stronger than expected German IFO Business Climate report. This was a bigger problem for German Bunds, however, and US Treasuries shrugged off the weakness.
The domestic session began with MBS 4 ticks higher at 101-02 and 10yr yields down to the high 2.69's. After a bit of a stumble, both remain in similar territory just slightly better than unchanged. Fannie 3.5s are up 2 ticks at 101-00. Fannie 4.0s are also up 2 at 104-16, and 10yr yields are down just over 1bp at 2.772.
There are no significant economic reports or events on the calendar today and trader participation should drop off even more quickly than it already has by noon Eastern. This could make for illogical volatility in the afternoon, but the general expectation for a sideways to slightly positive grind is already playing out. If that changes later today, it may not be indicative of market sentiment depending on how many warm bodies were a part of the move.
The domestic session began with MBS 4 ticks higher at 101-02 and 10yr yields down to the high 2.69's. After a bit of a stumble, both remain in similar territory just slightly better than unchanged. Fannie 3.5s are up 2 ticks at 101-00. Fannie 4.0s are also up 2 at 104-16, and 10yr yields are down just over 1bp at 2.772.
There are no significant economic reports or events on the calendar today and trader participation should drop off even more quickly than it already has by noon Eastern. This could make for illogical volatility in the afternoon, but the general expectation for a sideways to slightly positive grind is already playing out. If that changes later today, it may not be indicative of market sentiment depending on how many warm bodies were a part of the move.
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.
john murphy : "AR: have run into that scenario often. common for cost approach to be less or far less than mkt value. Most ins co's use marshal/swift X/C state farm which has a proprietary model for replacement cost. time to shop insurance carriers. "
Andrew Russell : "Usually the findings make the decision "
Andrew Russell : "What do the findings ask for?"
Scott Valins : "hey guys do charge offs on credit reports usually have to be paid if there is a balance showing?"
Andrew Russell : "Insurance companies do that, and can raise there fees even "post closing", where is their regulation?"
Andrew Russell : "have you ever seen on a purchase transaction, where if the house is worth 400k, the appraisal calls for replacement cost of 250k, and the buyer got insurance for 300k (more than enough), that the insurance company calls them after they close and ask them to raise the coverage to 450k? "
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