MBS RECAP: Bond Markets Loving Every Minute of Stock Sell-Off

By: Matthew Graham

As we discussed in this morning's Week Ahead, bond markets are highly attuned to the current fate of equities markets.  This can be viewed either from the standpoint of tradeflows (i.e. buying bonds because we need to do something with the money from the stocks we just sold) or due to more traditional fundamental trading decisions (i.e. markets are risk averse and thus we need to find something to sell in order to buy bonds and avoid risk).  Either way, the unifying theme is "global growth concerns." 

This provided a huge benefit to Treasuries in the overnight session.  10yr yields gapped lower by a wider margin than any other gap in over a year.  European trading hours brought another strong move on the heels of weaker economic data.   From that point on, the domestic session was largely uneventful with Treasuries weakening just a bit and MBS mostly outperforming (their way of getting caught up with Treasuries).  Prices, yields, and rates all hit their best levels since early June 2013. 


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
100-18 : +0-19
FNMA 3.5
103-20 : +0-14
FNMA 4.0
106-07 : +0-09
Treasuries
2 YR
0.3760 : -0.0519
10 YR
2.1970 : -0.0887
30 YR
2.9520 : -0.0620
Pricing as of 10/14/14 5:41PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:30PM  :  Back to Best Levels as Stocks Slide; Ongoing Positive Reprice Potential
9:50AM  :  Slight Pullback After Incredibly Strong Move Overnight; Gains Mostly Intact

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Jason Anker  :  "you seem to be trending in the right direction but I'd get an LOX too"
Jason Anker  :  "you could probably use last 24 months if you could get a WVOE for last three months of 12"
Jason Anker  :  "UW would like to avg all three numbers FH."
Jason York  :  "I would think you could if you could show the seperation with paystubs from 2012"
Frank Hanna  :  "FNMA Overtime question. Client has 10k in 2012, 22k in 2013 and 25k ytd. To fulfill the 24 month average would you take 2012,2013 and then ytd? or have you seen it acceptable to use only 2 months of 2012 plus current ytd?"