MBS MID-DAY: Bond Markets Stronger After Modest Morning Volatility

By: Matthew Graham • Fri, Jan 17 2014, 12:09 PM

While this morning's data releases haven't been top tier market movers, we did get a bit of a head fake toward weaker territory starting just after 9am. The weakness lasted until just after 10am, which was a bit of a paradox considering the weaker Consumer Sentiment data. That said, the 80.4 reading was still in line with the higher levels from the past 5 years.

Bonds improved during the Fed buying operation in 10yr Treasuries and have held those improvements since then. MBS and Treasuries are both holding near positive resistance levels (Fannie 4.0s at 104-01 and 10yr Treasuries at 2.832). The most bullish eventuality for 10's would be a break below 2.82.

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 96-06 : +0-05	FNMA 3.5 100-17 : +0-05	FNMA 4.0 104-01 : +0-04
Treasuries	2 YR 0.3834 : -0.0036	10 YR 2.8323 : -0.0127	30 YR 3.7691 : -0.0039
Pricing as of 1/17/14 12:09PMEST

Morning Reprice Alerts and Updates

A recap of Alerts and Updates provided to MBS Live subscribers.

11:02AM : Shaking Off Weakness; Back in Positive Territory Now

10:08AM : ALERT ISSUED: Weaker Sentiment Data Failing to Stem Losses; Bond Markets Paradoxically Weaker

9:51AM : Bond Markets Back to Unchanged after Industrial Production (Not Necessarily Because of it)

9:15AM : For 3rd Straight Day, Bonds Flat Overnight, Slightly Stronger After Data

Live Chat Featured Comments

A recap of featured comments from the Live Discussion on the MBS Live Dashboard.

Matthew Graham : "RTRS- US DEC HOUSING STARTS -9.8 PCT, BIGGEST DROP SINCE APRIL 2013, VS NOV +23.1 PCT (PREV +22.7 PCT) "

Matthew Graham : "RTRS- US DEC HOUSING STARTS 999,000 UNIT RATE (CONSENSUS 990,000) VS NOV 1,107,000 UNITS (PREV 1,091,000 UNITS) "

Andy Pada, Jr. : "can someone opine: housing starts is an estimate?"

Matthew Graham : "check out the explanatory notes at the bottom of the first page: http://mndne.ws/1hxShkX"

Matthew Graham : "also note the ±10.7%"

Geoff Allison : "Good question AP. Had no idea. Thought this line from the SOC was interesting: In addition, within a sample of land areas where building permits are not required, field representatives drive all roads looking for new residential construction activity. Really?"

Matthew Graham : "RTRS- U.S. DEC INDUSTRIAL OUTPUT +0.3 PCT (CONSENSUS +0.3 PCT) VS NOV +1.0 PCT (PREV +1.1 PCT) "

Benjamin Biscoe : "non occupant co borrower question. have a loan with two parents and kids but want to refinance to take the husband off due to divorce. wife has no income(student) and would be the only occupant. LTV is less than 50%. will that even work with the only income being the non occupying parents?"

Frank Hanna : "well, I think it can be does as non-oppoant primary as long as you have supporting income, BUT at 50% LTV, it shouldnt matter much to rate."

Jason York : "I think only LP will allow the combined income of the non-occ borrower"

Ross Miller : "Yep, LP is you only option and then your lender may not like it. I have run into this issue with low income owner occupants."

Roger Moore : "Many lenders have overlays that require the occupant to have 70% or less dti without the non occ "

Jason York : "You do have strong compensating factors, no cash out, low LTV, hopefully great credit as well"

Dan Clifton : "just got new orange county (FL) income limits for thei DPA for 2014. Income Limits wen DOWN! if economy is recovering why is median income going down????"

Frank Hanna : "Dan, Although I do not strongly support that the economy is in an all out recovery, my thought behind lower limits would be that state programs are attempting to assist those that need it most. If income limits were increased i feel that would show that those with greater earnings need more assistance."

Jason York : "I may be wrong, but I don't think they jsut pick the limits, but base it on the income levels in the area, so it wouldn't be them lowering the limit to help out the lower income levels"

Matthew Graham : "RTRS- THOMSON REUTERS/U. OF MICHIGAN U.S. CONSUMER SENTIMENT INDEX PRELIMINARY JANUARY 80.4 (CONSENSUS 83.5) VS FINAL DECEMBER 82.5 "