MBS MID-DAY: Off Best Levels After European Markets Close

By: Matthew Graham

The overnight session was generally flat to slightly stronger for Treasuries.  Early domestic trading was limited due to the snow storm in New York (though not as limited as it seemed that it would be based on yesterday's forecast).  The traders that managed to make it in were better buyers in Treasuries and better sellers in stocks.  That said, they could have merely been getting caught up with somewhat substantial overnight weakness in European equities markets.

More substantive trading motivations arrived in the form of a massive miss on Durable Goods (-3.4 vs +0.5 forecast).  Bond markets rallied noticeably on the news, which is saying something considering the general disconnection from domestic economic data.  Consumer Confidence played the opposite side of the field, coming out much stronger than expected (102.9 vs 95.1 forecast) at 10am.  There wasn't as much of a reaction here as much of the positivity is attributed to fuel prices.

It wasn't until European markets began closing at 11am that domestic markets finally turned a corner.  Both stocks and bond yields began rising in unison, and by 1pm, all of the domestic-session gains in Treasuries had been erased.  Overnight gains remain intact though, with 10's still 3bps lower than yesterday at 1.799.  Fannie 3.0s are still 6 ticks higher than yesterday, but were 12 ticks higher at the morning's best levels. 


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
102-25 : +0-06
FNMA 3.5
105-07 : +0-05
FNMA 4.0
106-26 : +0-02
Treasuries
2 YR
0.5060 : -0.0088
10 YR
1.8030 : -0.0250
30 YR
2.3750 : -0.0230
Pricing as of 1/27/15 1:15PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:48PM  :  ALERT ISSUED: Negative Reprice Risk Slowly Increasing
9:53AM  :  Bond Markets Holding Solid Gains Amid Light Participation

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "Watt says the G-Fee Change discussion is premature. "we don't know if we're going to change yet." "
Matthew Graham  :  "It's not "not real," but yes, it does have the potential to be somewhat stronger than it might be on a busier day. "
Michael Dormer  :  "Department of Redundancy Department: I shouldn't be taking this drop to 1.75 at face value, right? Everyone's snowed in? There's, like, three guys trading 10s, and that's the move I'm seeing?"
Matthew Graham  :  "It's light, but not as light as it should/would have been"
David Rudnick  :  "hey MG... is volume still very light? Does the blizzard that never was or snovereaction still have the markets tied up?"
Kenneth Crute  :  "doing one now Mike, he just needed to transfer from LLC to personal name prior to loan app "
Ira Selwin  :  "Note: Transfer of ownership from a corporation to an individual does not meet the continuity of obligation requirement. "
Ira Selwin  :  "MD - http://mndne.ws/1pBGTqV "
Mike Drews  :  "?---Buyer purchases his home in an LLC last month--gets poor terms and wants me to refi asap...My underwriter is saying that he needs transfer title into his name and be on title for six months before I can refinance the transaction...anyone run into this?"
Andrew Horowitz  :  "low fuel costs"
Matthew Graham  :  "RTRS - CONFERENCE BOARD CONSUMER CONFIDENCE INDEX AT HIGHEST SINCE AUGUST 2007"
Matthew Graham  :  "RTRS - US DEC SINGLE-FAMILY HOME SALES 481,000 UNIT ANN. RATE (CONS 450,000)"
Matthew Graham  :  "RTRS- US JOBS HARD-TO-GET INDEX 25.7 IN JAN VS DEC REVISED 27.3 (PREVIOUS 27.7) - CONFERENCE BOARD"
Matthew Graham  :  "RTRS- US JANUARY CONSUMER CONFIDENCE INDEX 102.9 (CONSENSUS 95.1) VS DECEMBER REVISED 93.1 (PREVIOUS 92.6) - CONFERENCE BOARD"
John Tassios  :  "yes it is VB, on top of prev negative #"
Victor Burek  :  "pretty big miss"
Matthew Graham  :  "http://mndne.ws/1LeoTzH"
Matthew Graham  :  "Durables -3.4. Not sure why there's no wire yet"