MBS MID-DAY: Bonds Trading another "Inside Day," This Time with Nagging Weakness

By: Matthew Graham

An 'inside day' refers to today's trading range happening completely INSIDE yesterday's trading range.  The resulting lower-highs and higher lows bespeak a decrease in the overall level of conviction.  It's not for nothing that we've had two inside days in a row now.

Part of the reason for that is the fact that Tuesday set a huge range, but it's also true that bond markets are still waiting for Europe to make up its mind as to the next big move.  European bonds have been essentially flat in February.  Treasuries, meanwhile, have begun freaking out on the chance that Europe's recent sideways grind is a prelude to a bigger bounce.

Today's economic data was irrelevant as far as trading reactions were concerned.  For more salient in terms of causality have been Greece vs EU headlines.  Initially, a letter from Greece, formally requesting a loan extension hurt bond markets.  But just after the domestic open, a spokesperson for the German Finance Minister fired back, basically saying the letter did nothing and means nothing.  Germany's message to Greece is clear: play by our rules or you can't have this money.  Germany already said they're willing to discuss slight tweaks to the current agreement, but as yet, the 2 sides are nowhere near the same page.

After that became clear to Greece for the 147th time this morning, one can only imagine the strategy session that led to the next big headline of the morning.  Long story short on that one: Greece is implying it could get some sort of help from China.  While that's not a new concept in this saga, it's the first time we've heard it in a while, and the timing is a bit too coincidental (i.e. Germany says "nein" a day before a Eurogroup decision and Greece says "fine, we'll ask China then!").

The net effect is nagging weakness for bond markets, but still in the context of the "inside day."


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
101-08 : -0-07
FNMA 3.5
104-11 : -0-05
FNMA 4.0
106-20 : -0-03
Treasuries
2 YR
0.6170 : +0.0120
10 YR
2.1100 : +0.0250
30 YR
2.7320 : +0.0160
Pricing as of 2/19/15 1:23PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
12:55PM  :  ALERT ISSUED: Edging Toward Negative Reprice Risk Territory
10:10AM  :  'Something' Changed Overnight for Greece, but No One Can Explain It

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Jason York  :  "If the total outstanding balance of all collection accounts for all borrowers is equal to or greater than $2,000, the lender must perform a capacity analysis as detailed below. Unless excluded under state law, collection accounts of a non-purchasing spouse in a community property state are included in the cumulative balance. All medical collections and charge off accounts are excluded from this guidance and do not require resolution."
Jason Anker  :  "i think findings will say so unless you have overlays"
Mike Drews  :  "medical disputes don't need to be removed on FHA correct?"
Matthew Graham  :  "Greece's chief export is now hopium, maybe"
Andrew Benson  :  "mg: nice update. I was wondering too why the reaction seemed to be as if something had changed."
Matthew Graham  :  "
MBS Live Update Issued
'Something' Changed Overnight for Greece, but No One Can Explain It"
Matthew Graham  :  "RTRS - PHILADELPHIA FED BUSINESS CONDITIONS FEBRUARY 5.2 (CONSENSUS 9.3) VS JAN 6.3"
Matthew Graham  :  "they must have the Eurozone confused with a Jerry Springer set."
Matthew Graham  :  "RTRS- GREEK GOVT SAYS EUROGROUP'S DECISION WILL SHOW WHO WANTS A SOLUTION AND WHO DOES NOT"
Matthew Graham  :  "RTRS- GREEK GOVT SAYS EUROGROUP TOMORROW HAS ONLY TWO OPTIONS, TO EITHER ACCEPT OR REJECT OFFER MADE BY GREECE TODAY"
Victor Burek  :  "they cant"
John Tassios  :  "I don't think Greek PM will budge either"
Victor Burek  :  "Germany wont budge...if Greece does there will be massive riots"
John Tassios  :  "no surprises there, you knew there would be no deal reached anytime soon"
Matthew Graham  :  "I wonder what kind of "expect" that is. Probably not the kind where Germany actually thinks that will happen."
Matthew Graham  :  "RTRS - GERMAN GOVT EXPECTS GREECE TO MAKE FIRM COMMITMENT TO PREVIOUS REFORM AGREEMENTS - EURO ZONE OFFICIAL"
Matthew Graham  :  "Alaska and Hawaii top well-being list, proving once again that Americans are happier and happier the farther away they are from America. http://mndne.ws/1DEzfFj"
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS 4-WK AVG FELL TO 283,250 FEB 14 WEEK FROM 289,750 PRIOR WEEK (PREVIOUS 289,750)"
Matthew Graham  :  "RTRS- US JOBLESS CLAIMS FELL TO 283,000 FEB 14 WEEK (CONSENSUS 293,000) FROM 304,000 PRIOR WEEK (PREVIOUS 304,000)"