MBS RECAP: Bond Markets Weather Month-End Storm With Minimal Losses

By: Matthew Graham •

Month/Quarter-end trading dynamics made for a volatile day in the context of the recent range.  It wasn't so much that the moves were big, just that they seemingly came out of left field and ran their course quite quickly. 

There were two distinct examples of such movement.  The first came at the 9:30am stock market open with yields and stock prices dropping aggressively until 10am.  From there, as if to emphasize the point that economic data just couldn't matter any less, an exceptionally weak Consumer Confidence report marked the end of the rally for bond markets and the end of the sell-off for stocks. 

The mid-morning to early afternoon hours were completely uneventful with both MBS and treasuries trading narrow ranges.  2:45pm brought the next bout of volatility as a last-minute quarter-end shuffle saw not only position-squaring from traders, but also several last minute corporate bond hedges selling treasuries on this month's books.

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
98-20 : -0-04
FNMA 3.5
102-08 : -0-03
FNMA 4.0
105-13 : -0-02
Treasuries
2 YR
0.5830 : +0.0080
10 YR
2.5020 : +0.0230
30 YR
3.2100 : +0.0420
Pricing as of 9/30/14 4:30PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:59PM  :  ALERT ISSUED: Once More For Emphasis: Negative Reprices Are Technically Possible, But...
2:54PM  :  ALERT ISSUED: Volatility Surrounding Month-End Treasury Close; High Knee-Jerk Potential
10:27AM  :  Consumer Confidence gets 2 Minutes of Fame
9:57AM  :  Bond Markets Moderately Weaker Overnight, but Holding/Bouncing Back
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
joon choi  :  "some lender do have overlay for FTHB investment property"
Ben Biscoe  :  "so they need to have the history even if they qualify carrying it?"
Ira Selwin  :  "Some investors have overlays for it VB"
Tim Robinson  :  "This board just saved my behind. I will literally be working on the exact same scenario this afternoon. Time to do some research"
Victor Burek  :  "i never knew you had to have mtg history to buy a NOO"
Ira Selwin  :  "The Borrower must demonstrate at least a 2-year history of managing 1- to 4-unit Investment Properties if rental income is considered in qualifying the Borrower."
Ira Selwin  :  "Required on LP, and some investors have overlays for DU"
Chip Harris  :  "I have a realtor insisting that a client must have mortgage history to buy a Non owner. I have never seen that, but I have never done a NOO for someone with no mtg history. Just graduated college, making $130K a year and just bought a primary a month ago. See any issues if I get a DU A/E?"