MBS RECAP: Mid-Day Volatility False-Alarm; Back to Sleep for Markets

By: Matthew Graham •

With limited interruptions, bond markets have been sleepwalking since most of the summer.  While that has afforded them some measure of forward progress, it's been slow going, and far from coherent.

Today was no exception as a series of events that would have historically motivated more of a change, instead leave trading levels very much in line with yesterday's latest levels.  They also happen to be about mid range for the week.

As for the events that swung and missed, there were headlines out of Ukraine and of course Fed Chair Yellen's Jackson Hole Speech.  But even as early as this afternoon, the day's biggest market mover was already revealed to be one big trade.  That's a slap in the face to the normal connection between fundamental data and market movement.  In other words, domestic bond markets are simply on cruise control--preferring to follow the leaders of the herd rather than observe the risks and opportunities around them. 

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
98-29 : +0-02
FNMA 3.5
102-19 : +0-01
FNMA 4.0
105-24 : +0-01
Treasuries
2 YR
0.4960 : +0.0280
10 YR
2.4030 : -0.0040
30 YR
3.1560 : -0.0370
Pricing as of 8/22/14 5:04PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:24PM  :  Most Markets Holding 8-11am Ranges; MBS Outperform
11:02AM  :  Best Case For a Bounce Back so Far
10:41AM  :  ALERT ISSUED: Negative Reprices Quickly Becoming Possible or even 'Likely'
10:26AM  :  ALERT ISSUED: Bond Markets Weaker After Yellen Speech, but Trying to Bounce Back
9:34AM  :  Bond Markets Continue Unwinding Overnight Ukraine-Based Rally
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
John Tassios  :  "bund yields for the most part are low due to possible EU QE, deflation scares, and low GDP growth"
Matthew Graham  :  "I think Ukraine/Russia is a sideshow. Just an excuse for whippier short-term movements."
Jeff Anderson  :  "I think the question is how much of the EU wet blanket is Ukraine/Russia related. Where would bunds be if this is resolved peacefully? "
Matt Hodges  :  "Chap 4: credit u/w"
Matt Hodges  :  "g. Deferred Student Loan Payments If student loan repayments are scheduled to begin within 12 months of the date of VA loan closing, lenders should consider the anticipated monthly obligation in the loan analysis. If the borrower is able to provide evidence that the debt may be deferred for a period outside that timeframe, the debt need not be considered in the analysis."
dustin mcalister  :  "not if 12 plus months"
Ben Biscoe  :  "with VA loans if a student loan payment is deferred for at least 12 months after closing those dont have to be included do they? have an UW telling me if the debt will impact borrowers ability to pay have to be counted even though they are deferred. "