MBS RECAP: Bond Markets May Have Lost Ground, But They Had a Great Day

By: Matthew Graham •

In case you missed it, today saw one of the biggest ever market reactions to a personnel announcement.  Get caught up HERE if you like.  There is no question and no debate over the fact that this was the only salient market mover for bond markets today, and that the GDP data was completely ignored.  If you happen to catch someone saying bonds lost ground because GDP came in at a strong 4.6%, please correct them!  We don't need that sort of inaccuracy floating around out there, potentially polluting more impressionable minds.

Look at bond's reaction vs stocks when the news came out:

If GDP was responsible for changing anyone's trading ideas, we'd certainly have seen a reaction in stocks.  The absence of a reaction plus the fact that Gross news concerns the world's largest BOND fund is more than enough to educate anyone who might be misguided.  If that's not enough, just ask them to look at when volume kicked in.

Thankfully, because the fund in question holds Treasuries, they bore the brunt of today's weakness, leaving MBS to outperform all day long.  That's not even the best news though.  The best news is that all of today's bond market weakness is the product of speculation that some bond market investors will pull their money temporarily out of the bond market and then invest it again... soon... IN the bond market! 

In other words, this was like a floater in the pool.  Everyone got out.  Some will get back in once things are cleaned up.  Some will go to a different pool, but very few have been so scared for life that they'll never go swimming again.

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
98-17 : -0-03
FNMA 3.5
102-06 : -0-02
FNMA 4.0
105-12 : -0-02
Treasuries
2 YR
0.5790 : +0.0160
10 YR
2.5280 : +0.0170
30 YR
3.2150 : -0.0050
Pricing as of 9/26/14 5:19PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
8:59AM  :  ALERT ISSUED: Uneventful Overnight; Meaningless GDP; And Now a Market Mover Out of Left Field
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS- MORNINGSTAR ANALYST SAYS "LIKELY THAT TENS OF BILLIONS, IF NOT HUNDREDS OF BILLIONS IN AUM, WILL FOLLOW GROSS TO JANUS FROM ALLIANZ""
Jason Anker  :  "thats got to be it TR"
Ted Rood  :  "yeah, that may be it. They forgot to mention that minor aspect."
Brian McFarlane  :  "under the Fannie HFA program"
Brian McFarlane  :  "TR, to my knowledge you can only do 3% down through state housing agencies"
Ted Rood  :  "Anyone here writing 3% down My Community purchases anymore? Thought they went away, but had a lender this week tell me they were writing a ton of them."
Matthew Graham  :  "RTRS- EXCLUSIVE-GUNDLACH SAYS HE BELIEVES GROSS WILL DO BETTER AT JANUS THAN HE DID RECENTLY AT PIMCO BECAUSE HE "ISN'T MANAGING A LOT OF MONEY""
Matthew Graham  :  "And now for the punchline:"
Matthew Graham  :  "RTRS- EXCLUSIVE-GUNDLACH SAYS HE AND GROSS MET LAST WEEK AT GUNDLACH'S HOUSE AND GUNDLACH SAYS HE THOUGHT "WE HAD A LOT IN COMMON""
Matthew Graham  :  "RTRS- EXCLUSIVE-JEFFREY GUNDLACH TELLS REUTERS BILL GROSS CALLED HIM THURSDAY NIGHT TO SAY HE WOULD NOT BE JOINING DOUBLELINE AND THAT HE WAS LEAVING PIMCO FOR ANOTHER FIRM "