MBS MID-DAY: Bonds Bounce Back After Brief Morning Sell-Off

By: Matthew Graham •

Bond markets began the day much-improved after a strong overnight session.  Economic data was pervasively weaker in Europe and expectations for Eurozone Quantitative Easing are running high.  This helped German Bund yields drop below .90 briefly. 

US Treasuries came along for the ride with 10yr yields down to 2.363 at their best levels this morning.  MBS have kept up with the rally quite well with spreads at their tightest levels since early August.  Fannie 3.5s were as high as 102-28 at this morning (+7/32nds on the day).

The positivity hit a bit of a speedbump just after 10am when unnamed sources told Bloomberg that the ECB is unlikely to announce QE at next week's meeting, but that could depend on August's inflation data.  Treasuries and MBS both gave up more than half their gains on that news, but have since gotten most of them back.

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
99-10 : +0-07
FNMA 3.5
102-26 : +0-05
FNMA 4.0
105-28 : +0-04
Treasuries
2 YR
0.5160 : -0.0120
10 YR
2.3710 : -0.0220
30 YR
3.1340 : -0.0180
Pricing as of 8/27/14 11:45AMEST
Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:51AM  :  Bond Markets Off Best Levels After ECB Clarifies QE Stance
9:43AM  :  Yields Stay Low as EU QE Gets More and More "Real"
Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Steve Sims  :  "http://mndne.ws/1tbY87J"
Steve Sims  :  "They are complaining about the GSE put backs"
Steve Sims  :  "Interesting comments yesterday from Stumpf and Dimon on put backs from GFE's and how they are both going to tighten down even further on underwriting"
Sung Kim  :  "DO will tell you if you need to do something"
Victor Burek  :  "correct"
Jason York  :  "and only way to remove them is by a rescore, correct?"
Victor Burek  :  "I always have to remove disputes"
Jason York  :  "somehow I haven't run into this before, but when the borrower has old disputed tradelines on their credit, is the only real option to do a rescore to have the disputes removed?"
Sung Kim  :  "great day ahead MG - especially the win/win part"