MBS RECAP: US Bond Markets Run the Table and Make it Look Easy

By: Matthew Graham •

When global financial markets are convulsing with uncertainty and anticipation, where can you find a safe, liquid place to park your money? 

One of the best, and most frequently repeated answers to that question today was: US Treasuries.  5yr Notes were the biggest winner, but 10yr Notes weren't far behind, rallying nearly 15bps .  As is normally the case during massive flights-to-safety, MBS lagged the move in Treasuries, but nonetheless were dragged up to their best closing levels in more than 20 months (Fannie 3.0s at 103-10!).

Today's volatility was kicked off by a completely unexpected and intensely interesting move on the part of the Swiss National Bank.  Almost any google-able article can tell you all about it.  Here's one with some additional color from market participants: Swiss central-bank shocker: It’s a ‘tsunami’; it’s a ‘bombshell

As it happened, this was really the only meaningful event of the day for bond markets.  It caused such a massive amount of uncertainty and volatility that US Treasuries became one of the only no-brainer locations to stash cash until the volatility was sorted out.  Simply put, Treasuries didn't even have to try today. 

A lot of the volatility has to do with the implications about next week's ECB Announcement.  After tomorrow, it's a 3 day weekend and then only 2 trading days before that announcement.

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
103-09 : +0-20
FNMA 3.5
105-17 : +0-12
FNMA 4.0
106-30 : +0-05
Treasuries
2 YR
0.4200 : -0.0810
10 YR
1.7280 : -0.1270
30 YR
2.3670 : -0.0990
Pricing as of 1/15/15 5:20PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:13AM  :  All About the Franc, 'Bout the Franc, Not Data
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Sung Kim  :  "pricing is all over the place everywhere SL"
Scott Lushing  :  "is jumbo pricing all over the place at all lenders? one day penny was .375 worse than ditech and 1 week later it was .375 BETTER than ditech"
Scott Lushing  :  "amazing that they never updated it. in fact the old DU used to have an alert show up that stated the new mortgage letter to reference and when they updated DU they removed it but left the old rule."
Timothy Baron  :  "I just had that come up SL. My underwriter said to ignore the DU message and go off the mortgagee letter."
Scott Lushing  :  "the mortgagee letter we use states you ignore disputed accounts below $1000 but DU still has the old condition on there?"
Scott Lushing  :  "I still see this condition on my approval, which should be updated since the mortgage letter is over one year old: If the credit report reveals that the borrower is disputing any credit accounts or public records, the mortgage loan application must be referred to a DE underwriter for review, unless the disputed account has a zero balance; is marked as "paid in full" or "resolved"; or has both a balance less than $500 and the date of the dispute is more than 24 months old."
Matthew Graham  :  "RTRS - ECB'S WEIDMANN SAYS EUROPEAN COURT ADVISER'S OPINION ILLUSTRATES LEGAL LIMITS ON ECB, WHICH MEANS IT CANNOT CONDUCT ECONOMIC POLICY OR MONETARY FINANCING"