MBS RECAP: Economic Data Shrugged Off; Bonds Follow Europe Amid Quiet Conditions

By: Matthew Graham •

The biggest story and smallest surprise of the day was the fact that trading conditions in bond markets were extra light.  Between the market closure in London and the simple fact that it was the Monday of the last week of Summer, volume struggled to rise above the weakest levels of the year.

With London closed, US Treasury trading got a late start overnight.  Even when the rest of Europe is open, Treasuries depend on London being open for late overnight trading.  By the time they came on line and got caught up to the rally in German bond markets, Treasuries began the day almost 2 ticks lower.  MBS opened roughly 4 ticks higher and neither would see any stronger levels for the rest of the day.

That said, neither MBS nor Treasuries saw any significant weakness either.  A strong move to new all-time highs in stocks combined with the German bond market pull-back from new all-time lows to put pressure on bonds mid-morning.  Treasuries and MBS hit their weakest levels just after 11am and spent the rest of the day drifting inconsequentially sideways.

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
99-03 : +0-06
FNMA 3.5
102-22 : +0-03
FNMA 4.0
105-25 : +0-02
Treasuries
2 YR
0.5040 : +0.0120
10 YR
2.3840 : -0.0190
30 YR
3.1340 : -0.0230
Pricing as of 8/25/14 4:57PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:27AM  :  MBS hit Lows Despite Weaker Home Sales Data; Trying to Bounce
9:18AM  :  Bond Markets Boosted by Europe Overnight; Sliding Into Domestic Hours
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Joe Gistaro  :  "Freddie Rent loss insurance for 2- to 4-unit Primary Residences Prior to this Bulletin, the Guide required that the Borrower maintain six months’ rent loss insurance for a 2- to 4-unit Primary Residence when rental income is used in qualifying. We are removing the requirement for rent loss insurance when the property is a 2- to 4-unit Primary Residence. Sections 22.19, General Property Insurance Requirements, and 58.3.2, Rent Loss Insurance, have been updated to reflect this change"
Sung Kim  :  "If you are using rental income then you need rent loss"
Andy Pada, Jr.  :  "does Freddie Mac require rent loss insurance on investment property relief refis?"