MBS RECAP: Week's Monotonous Trend Broken as Bond Markets Slide

By: Matthew Graham •

For the past 4 sessions, bond markets have traded a narrow range near their best levels of the year.  This effectively began with the geopolitical risk rally on the 17th.  It's not entirely fair to say the narrow trend is over, but if not, it's being stretched to the limit today.  Fannie 3.5s are heading out the door  just over 3/8ths of a point weaker.

This began in the overnight session as European bond markets (using Germany as a benchmark) moved up in yield from their own lowest levels (though in their case, it was all-time lows).  Domestic data didn't help as Jobless Claims were much stronger than expected. 

New Home Sales helped stem the tide of losses by coming in much MUCH weaker than expected.  That said, the losses were only really stemmed for Treasuries.  MBS maintained a modestly negative slant for the rest of the day, resulting in several negative reprices.

It continues to be the case that markets are likely to make their biggest decisions next week starting with Wednesday's ADP/GDP/FOMC trio and culminating with Friday's NFP. 

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
98-06 : -0-14
FNMA 3.5
102-02 : -0-13
FNMA 4.0
105-09 : -0-11
Treasuries
2 YR
0.4959 : +0.0199
10 YR
2.5142 : +0.0502
30 YR
3.3044 : +0.0464
Pricing as of 7/24/14 3:59PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:35PM  :  ALERT ISSUED: Just a Reminder: Still Some Reprice Risk
10:49AM  :  ALERT ISSUED: Reprice Risk Still Here!
10:20AM  :  Horrid New Home Sales Data Prompts Only a Modest Bounce
9:57AM  :  ALERT ISSUED: Another Day With Early Negative Reprice Risk
8:51AM  :  Bond Markets Notably Weaker Overnight, and Again After Claims Data
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Scott Valins  :  "fair game or not cool? Greenlight loans sends my client an email two hours after I order the online payoff from Nationstar stating they received his payoff request and will be calling him within 24 hours to discuss financing needs"
Ryan Kelly  :  "The lender may verify a self-employed borrower’s employment and income by obtaining from the borrower copies of his or her signed federal income tax returns (both individual returns and business returns) that were filed with the IRS for the past two years (with all applicable schedules attached). Alternatively, the lender may use IRS-issued transcripts of the borrower’s individual and business federal income tax returns that were filed with the IRS for the most recent two years—as long as the information provided is complete and legible and the transcripts include the information from all of the applicable schedules. (See B3-3.1-06, Requirements and Uses of IRS Form 4506-T (07/30/2013).) The lender may waive the requirement for business tax returns if: The borrower is paying the down payment and closing costs with his or her own funds, The borrower has been self-employed in the same business for at least five years, and The borrower’s individual tax returns show an increase in self-employment income over the past two years."
Ryan Kelly  :  "Fannie Mae Seller Guide B3-3.2-01"
Ryan Kelly  :  "BB, yes but good luck getting an UW to go along with it today"
Ben Biscoe  :  "question - i have a self employed borrower who is refusing to provide his business returns. says that all the info we need is on his personal returns. i know that he owns more than 25%, is there any way around not having to get them? I cant think of anything so figured I would throw it out there. "