MBS RECAP: Technically Positive, but Might as well have been a Holiday

By: Matthew Graham •

Japan was out for a holiday today and US markets might as well have been.  Apart from the first few minutes of the domestic session, today was one of the calmest days in terms of volatility in recent memory.  From 8:30am on, Fannie 3.5 MBS held a range of 101-18 to 101-21 (less than an eighth of a point).  10yr yields held between 2.596 and 2.581.

Against the backdrop of every other day of September, today is the most resoundingly positive for bond markets.  That sounds a lot more fun than it is though.  Reason being: today's strength was facilitated by the rampant weakness that preceded it.  The past two weeks have been the worst since the first 2 of November 2013.  Friday saw the weakest levels in over a month.  Today's strength was merely a token correction to the broader trend.

To say "all eyes are on Wednesday's FOMC events" would be a huge understatement at this point.  That made it easier to treat today as a 3rd weekend day.  Any inherent biases ahead of Wednesday's FOMC news should be more apparent in tomorrow's session.  It could go either way.  Despite all the hype, the outlook is fairly well mixed as to what the Fed may actually change.

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
97-26 : +0-07
FNMA 3.5
101-20 : +0-05
FNMA 4.0
104-29 : +0-02
Treasuries
2 YR
0.5440 : -0.0200
10 YR
2.5920 : -0.0220
30 YR
3.3440 : -0.0070
Pricing as of 9/15/14 4:49PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:40AM  :  Bond Markets Manage Token Improvement After Mixed Data
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Ted Rood  :  "The MI is a real bargain on those 85% investment deals."
Ray Leone  :  "But, I have found Fannie Non-Owner to 85% LTV?"
Hugh W. Page  :  "Confirmed as of Oct 7"
Travis Waters  :  "That is correct Ray"
Ray Leone  :  "I just learned that Fannie Homepath is history. I'd like an independent confirmation. Please?"
Matthew Graham  :  "lenders can reprice very quickly on Fed days. In a lot of cases, there won't be time to react. This depends heavily on the lender though. 2pm is the first big movement potential. Then again after 2:30pm during the press conference."
David Rudnick  :  "wed- what time should I have my finger on the trigger if the ish hits the fan?"
Michael Prime  :  "Scott, as long as the income is originated from the same source, you should be able to average it. I’ve had similar situations in the past."
Scott Valins  :  "hey guys, I have a commercial RE broker who was schedule C in 2012 and created an LLC for 2013. He shows guaranteed payments to partners as part of his income on his LLC returns/K-1. Can I use that income or do I need two years of it? I recall once having an u/w throw it out b/c there wasn't a two year history of the guaranteed payments. This would be for a jumbo loan."