MBS MID-DAY: Central Bankers Comments Boost Bond Markets

By: Matthew Graham •

Europe and the US serenaded each other this morning with a hot rendition of "Dueling Bankers."  Not to be confused with dueling banjos, this song features the respective heads of the ECB and Federal Reserve mirroring and matching each others' riffs, slightly picking up the tempo and complexity as the song progresses.  Come to think of it, it's a lot like dueling banjos.  Just replace the banjo notes with comments from Yellen and Draghi about rates and inflation.

Draghi was first up, and his comments on the ECB being not merely "ready to act" any longer, but actually "comfortable acting at the next meeting" got European bond markets a bit excited.  During that part of the song, European bond markets led the move, but US Treasuries followed to a reasonable extent, hitting new lows for the day.

Then it was Yellen's turn.  She said "interest rates are unlikely to begin rising until we're in a strong economic recovery" and also indicated that labor markets would need to keep improving for QE to finish in the Fall.  This time around, US Treasuries led the charge and European bonds merely moved back to their Draghi-inspired low yields.  Treasuries and MBS made new price highs for the day with Fannie 3.5s up to an impressive 102-16.  10yr yields, however, are still resisting a break below 2014 lows, hovering around 2.59 at the moment.

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
98-11 : +0-06
FNMA 3.5
102-16 : +0-06
FNMA 4.0
105-17 : +0-05
Treasuries
2 YR
0.3909 : -0.0121
10 YR
2.5874 : -0.0346
30 YR
3.3765 : -0.0265
Pricing as of 5/8/14 12:00PMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:58AM  :  Best Levels of the Day After Yellen Comments
8:55AM  :  Bond Markets Unchanged Overnight; MBS Edge Into Positive Territory
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Christopher Stevens  :  "10YR back in the range...oh wait it never really left. It's like a little boy who runs away from home by going to the stop sign at the end of the street. Out of the safety of the yard but still within eye shot of his parents. Then after a little while he heads back home to the safety of the yard again. The range is the range for now. "
Matthew Graham  :  "RTRS - US JOBLESS CLAIMS FELL TO 319,000 MAY 3 WEEK (CONSENSUS 325,000) FROM 345,000 PRIOR WEEK (PREVIOUS 344,000)"
Matthew Graham  :  "RTRS - US CONTINUED CLAIMS FELL TO 2.685 MLN (CONS. 2.750 MLN) APRIL 26 WEEK FROM 2.761 MLN PRIOR WEEK (PREV 2.771 MLN)"
Matthew Graham  :  "RTRS - DRAGHI - GOVERNING COUNCIL COMFORTABLE WITH ACTING NEXT TIME"
Matthew Graham  :  "I'm going to change my assessment from "candidate" to "known market mover" now on those ECB headlines. I've been checking and cross-checking movement in Bunds and Euros against the newswires and those look like they sparked a rally in Bunds and drop in the Euro that's helping Treasuries and MBS at the moment. "
Matthew Graham  :  "RTRS - FED'S YELLEN: RECOVERY OF HOUSING 'VERY IMPORTANT' TO OVERALL U.S. ECONOMIC RECOVERY"
michael gannon  :  "has anyone seen an unusual number of refer/eligible coming up on VA loans with weaker or thin credit recently? We have had 3 in the last 2 weeks that are not getting an approve eligible. Ratios are low and credit is thin, but not bad."
Mike Drews  :  "yes MG----I have one that LP would only accept under 35% DTI"