MBS RECAP: Plenty of Reprices Followed by Afternoon Volatility Surrounding Bernanke

By: Matthew Graham •

MBS began the day on a down note with prices off 5/32nds.  In the absence of data (or anything at all, really), bond markets found their footing between 8:30-9:00am and advanced steadily until Bernanke's speech in the afternoon.

By that time, quite a few lenders had repriced positively on the day.  Risks shifted temporarily to the downside as MBS gave up their gains after Bernanke, but as soon as Treasuries held the 3.0 percent level, Fannie 4.0 MBS stuck to their 103-00 level.  They're currently drifting toward the close at 103-01. 

There was no overt reason for the weakness contained in Bernanke's speech, but it was clearly the moment at which bond markets decided to abandon what had been a decent-enough afternoon rally.  Volume was as low as expected with the storm keeping many players sidelined in New York and next week's events (FOMC Minutes and NFP) continuing to provide a far more compelling reason for traders to come back from holiday breaks.

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
94-32 : +0-03
FNMA 3.5
99-13 : +0-02
FNMA 4.0
103-01 : +0-01
Treasuries
2 YR
0.4004 : +0.0164
10 YR
2.9948 : +0.0098
30 YR
3.9239 : +0.0049
Pricing as of 1/3/14 4:20PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:05PM  :  ALERT ISSUED: MBS Back to Negative Territory After Bernanke; Some Negative Reprice Risk
1:04PM  :  Well Into Positive Territory; Positive Reprice Potential
9:37AM  :  Holding Ground at Slightly Weaker Levels
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Ross Miller  :  "the Social Security Administration (SSA) will no longer accept electronic/digital signatures on the SSA-89 Form. Way to go SSA that's how you stay in the correct century."
Matthew Graham  :  "MBS will be breaking through if they go any higher. http://mndne.ws/1l7tWVz"
Jason York  :  "I have a customer that is looking to buy a new home, and will be making his current home a rental property. We can document more than 30% equity, and will have a copy of the lease and security deposit. In the guides, it says that if you have all of these items, you can use 75% of the gross rental income as income. In this particular case, 75% of the gross rental income covers the mortgage payment, and gives him positive rental income. I can use that additional income, correct? I’m not limited to just covering his mortgage payment am I?"
Jason Anker  :  "yes, add @ 75% and your done"
Matthew Graham  :  "RTRS - FED'S BERNANKE SAYS CUT IN BOND-BUYING REFLECTS LABOR MARKET PROGRESS "
Matthew Graham  :  "RTRS- BERNANKE: CUT IN BOND-BUYING DOES NOT DIMINISH FED'S COMMITMENT TO ACCOMMODATION AS LONG AS NEEDED "
Matthew Graham  :  "RTRS- BERNANKE: FOMC TO CONSIDER CHANGING PARTS OF OPERATING FRAMEWORK, INCLUDING NEW TOOLS "