MBS RECAP: FOMC Minutes Help MBS get Back to Positive Territory

By: Matthew Graham •

The day ends with something of a mixed message as Treasuries are still slightly weaker in 10 and 30yr maturities while 2-7yrs are stronger, along with MBS.  All had begun the day in weaker territory and remained there for most of the session.  The 10yr Treasury auction wasn't that great and bond markets weakened as a result.

FOMC Minutes, however, took us in the opposite direction.  Interestingly enough, the entirety of today's movement--which is based on events typically considered to be big potential market movers--took place within yesterday's range in 10yr yields.  In other words, today's FOMC-driven strength, traversed no more ground than yesterday's "just because" rally. 

MBS outperformed, and 4.0s are heading out in just slightly positive territory while 10yr Treasuries are still 1.25bps higher.  The gist of the FOMC Minutes rally was the clarification that markets should focus more on the policy statement than the Fed Forecasts, and that the Fed was concerned that markets misconstrued the forecasts as being overly indicative of an earlier rate hike. 

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
96-27 : -0-02
FNMA 3.5
100-31 : +0-01
FNMA 4.0
104-10 : +0-02
Treasuries
2 YR
0.3671 : -0.0319
10 YR
2.6935 : +0.0125
30 YR
3.5709 : +0.0289
Pricing as of 4/9/14 4:18PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:12PM  :  Bond Markets Improve Following FOMC Minutes
1:13PM  :  Bond Markets Weaker After 10yr Auction
12:57PM  :  10yr Auction Preview
9:27AM  :  Bond Markets Weaker Overnight, Mostly Holding Ground This AM
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Joseph Daquino  :  "Say I have a trust account with about $275K in it. $30K in cash and the rest in equities. Can I borrow $70K on margin + the $30K cash for a $100K down payment on a primary residence??"
Sung Kim  :  "margin loans are the same as 401k loans, secured borrowed funds from financial assets"
Sung Kim  :  "u/w will probably want the trust docs or certification to confirm accessibility "
Matthew Graham  :  "RTRS - U.S. SELLS $21 BLN 9-YR 10-MO NOTES AT HIGH YIELD 2.720 PCT, AWARDS 49.72 PCT OF BIDS AT HIGH"
Matthew Graham  :  "RTRS - U.S. 9-YR 10-MO NOTES BID-TO-COVER RATIO 2.76, NON-COMP BIDS $27.45 MLN"
Matthew Graham  :  "B-"
Andy Pada, Jr.  :  "can some one explain to me simple terms what the "great rotation" is?"
Matt Hodges  :  "movement from one class of investments into another"
Hugh W. Page  :  "Theory that ultra low bond yields with "rotate" investors into equities"
Matthew Graham  :  "an overused term that borrows the words from a concept introduced in 2012 (!!) regarding the shift from the 30yr secular bull market in bonds to a bear market in bonds, with stocks picking up the extra cash, mostly."
Matthew Graham  :  "AP, this was one of the best broad assessments (note the date stamp!) http://mndne.ws/1ekXXRH"