MBS MID-DAY: Year-End Tradeflows Helping Somewhat

By: Matthew Graham •

So far today, we have a moderate amount of incidental strength to offset the slightly larger amount of incidental weakness last week.  Bond markets continue to take cues much more readily from tradeflow considerations than from economic data.

Several big Treasury futures/options trades have helped paint a picture of short-covering (traders sell Treasuries short and subsequently are forced in as buyers in order to cover the short) and year-end curve trading (maintaining the same overall investment in Treasuries, but shifting between maturities.  For instance, note that 30yr bonds are down 4.8bps today vs 2yr Notes down only 1.16bps).

Apart from that, not much else has been going on.  Markets certainly haven't done much, if anything, to react to Pending Home Sales, which came in weaker than expected but technically higher (101.7 vs a downwardly revised 101.5).

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
95-09 : +0-11
FNMA 3.5
99-20 : +0-12
FNMA 4.0
103-06 : +0-11
Treasuries
2 YR
0.3834 : -0.0116
10 YR
2.9703 : -0.0357
30 YR
3.8966 : -0.0484
Pricing as of 12/30/13 11:25AMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:06AM  :  ECON: Pending Home Sales Weaker Than Expected
9:25AM  :  Moderately Higher in Light Holiday Volume
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Andrew Russell  :  "It is always exciting to be on the precipice of what could and should be our best years yet... "
Andrew Russell  :  "rates in the 5's, the world didnt end with QM/ATR, purchase business going up 20%"
Andrew Russell  :  "those who know how to fish, and fish well, will eat quite nicely in 2014! my .02"
Matt Hodges  :  "too many LOs skate by without doing the baseline work to be successful"
John Tassios  :  "Today and tomorrow will be year end bond buying by portfolio accounts, hopefully it will last Jan 2nd and 3rd"
Matthew Graham  :  "RTRS- U.S. NOV PENDING HOME SALES INDEX +0.2 PCT (CONSENSUS +1.0 PCT) TO 101.7-REALTORS "
Matthew Graham  :  "RTRS- U.S. NOV PENDING HOME SALES -1.6 PCT FROM NOV 2012 "
Victor Burek  :  "pretty disappointing"
Andy Pada, Jr.  :  "revision is nasty"