MBS RECAP: Bond Markets Trickle Back to Positive Territory

By: Matthew Graham •

The overarching caveat for any assessment of today's market activity is that the whole thing occurred in a relatively tight range.  Sustained highs and lows were in a 4/32nds range in MBS and just over 2bps in 10yr yields.  There was little, if any reaction to this morning's economic data or the 2-yr Treasury auction.  The biggest movement of the day was completely disconnected from anything overtly observable, including the stock lever.

Earlier this morning, it looked as though bonds and stocks might try to reconnect as selling pressure in bonds after 9am gave way to a stronger open for stocks.  We were later forced to abandon that consideration as bonds rallied moderately into the noon hour despite an ongoing advance in stocks.  The bond market action began looking more like the serendipitous ebbs and flows associated with corporate bond market hedging (sellers of corporate bonds using Treasuries to hedge their debt offerings.  If it's confusing--and it should be--this old article on the Verizon deal explains more).

Bond markets ended the day edging just barely into positive territory.  This was more true for MBS than Treasuries, which only managed to turn green in 10 and 30yr maturities.

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
96-23 : +0-01
FNMA 3.5
100-26 : +0-02
FNMA 4.0
104-03 : +0-02
Treasuries
2 YR
0.4074 : +0.0124
10 YR
2.7187 : -0.0023
30 YR
3.5001 : -0.0259
Pricing as of 4/22/14 4:06PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:14PM  :  Very Slight Positive Reprice Potential For Some Lenders
9:36AM  :  Negative Bias Emerging as Participation Picks Up
9:07AM  :  Bond Markets Unchanged and Uninspired
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Chip Harris  :  "How shoudl I classify a duplex on the schedule of REO? Lives in half, rents half. Do I put it in as a rental?"
Jason Anker  :  "Chip its your OOC prop w/ income"
Chip Harris  :  "I have an underwriter that won;t let me use stock options for a Starbucks Manager that has a two year history and they show on his VOE and on his W2s and paystubs when he sells them every year. She says that those are not guaranteed so we can;t count them."
Sung Kim  :  "that is a tough one chip"
Ira Selwin  :  "Fannie allows it"
Victor Burek  :  "his W2 income isn't guaranteed either"
Ira Selwin  :  "Develop an average income from the last two years (according to the Variable Income section of B3-3.1-01, General Income Information), and use the averaged amount as part of the borrower’s qualifying income as long as the borrower provides evidence that he or she owns additional property or assets that can be sold if extra income is needed to make future mortgage loan payments."