MBS MID-DAY: Bond Markets Holding Modest Gains Ahead of 7yr Auction

By: Matthew Graham •

Bond markets were almost perfectly flat overnight and held a narrow 2bp range in 10yr Treasury yields.  MBS started out in slightly negative territory and were soon greeted by GDP data that was roughly in line with forecasts (2.6 vs 2.7) and Jobless Claims that were much lower (311k vs 325k). 

By all rights, the Claims data could have made for additional morning weakness, but paradoxically, bond markets improved.  The weaker Pending Home Sales data at 10am had no objection. 

To a large extent, Treasuries and MBS marched to the beat of their own drums throughout the morning--a fact that suggests some pervasive, underlying source of demand.  Without having an opinion on whether or not that demand continues or soon meets resistance, we can conclude that market participants have reasons beyond the economic data to trade how they're trading.  This isn't uncommon heading in to the end of the month.  Sometimes it works in our favor and tentatively, this looks like one of those times.

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
96-25 : +0-03
FNMA 3.5
100-28 : +0-03
FNMA 4.0
104-07 : +0-02
Treasuries
2 YR
0.4535 : +0.0075
10 YR
2.6756 : -0.0274
30 YR
3.5103 : -0.0407
Pricing as of 3/27/14 12:07PMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:51AM  :  Edging Into Positive Reprice Territory for Some Lenders
8:50AM  :  Bond Markets Holding Ground After Claims and GDP
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Jeff Anderson  :  "SIVA and bank statement programs? I read yesterday about lower credit programs coming back maybe? Did I wake up in 2006 this AM? Business is slowing so let's open the vault of programs? Don't wory, history never repeats itself. GM, all."
Ira Selwin  :  "Start rate = floor, 6.95 margin, 3/1/6 caps, most likely can only be done on n/o/o though, as they are considering that "business use""
Jeff Anderson  :  "Definitely need some common sense programs, but hopefully no one gets crazy again."
Matthew Graham  :  "RTRS- US FINAL Q4 GDP +2.6 PCT (CONSENSUS +2.7 PCT), PREV +2.4 PCT; FINAL SALES +2.7 PCT (CONS +2.4 PCT), PREV +2.3 PCT"
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS FELL TO 311,000 MARCH 22 WEEK, LOWEST SINCE NOV 2013 (CONSENSUS 325,000) FROM 321,000 PRIOR WEEK (PREVIOUS 320,000)"
Matthew Graham  :  "GDP was boring. Jobless Claims is the bigger story. Really confirming that challenge of 323k now"
Victor Burek  :  "very odd moves after that data"
Vince Boryla  :  "Does VA allow a seller rent back, and if so how many days. Thanks"
Matt Hodges  :  "yes, 60 days "
Ted Rood  :  "Nice to see Maxine Waters has a plan for the GSE's. Her flood insurance reform worked so well for those folks whose premiums went up by a factor of 10."
Matthew Graham  :  "RTRS- U.S. FEB PENDING HOME SALES INDEX -0.8 PCT (CONSENSUS UNCHANGED) TO 93.9, LOWEST INDEX SINCE OCT 2011"
Matthew Graham  :  "RTRS - U.S. FEB PENDING HOME SALES -10.5 PCT FROM FEB 2013"
Jeffrey Statz  :  "anyone seeing a pick up in accepted offers in the past week?"
Tom Sawyer  :  "yes"
Mike Drews  :  "3 yesterday"
Jeff Anderson  :  "Not yet due to lack of inventory. Offers have picked up, so that's 1/2 of the equation at least."
Hugh W. Page  :  "ditto here on Jeff's comment"