MBS RECAP: Strong Start, Much Weaker Finish as Corporate Deals Hit Rates

By: Matthew Graham •

For being a day that followed 2 sessions of gains in a month where 2 sessions of gains is nearly unheard of, today got off to a great start.  There were new all-time lows in German Bund yields and US 10s were all the way down to 1.931 at their best levels.  By the end of the day though, they'd be exactly 10bps higher.

The weakness started right off the bat after a round of mixed economic data at 8:30am.  Perhaps it was the stronger Durable Goods headline or the big increases in Real Wages in the CPI data.  Whatever it was, bonds didn't like it. 

Tradeflows consolidated inside yesterday's range heading into the 7yr auction, but that was the last we'd see of yesterday's range.  A weak auction and a glut of corporate bond issuance pushed rates rapidly higher in the afternoon.  The consolation is that MBS had things much easier than Treasuries and rate sheets weren't too much worse for the wear.

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
101-20 : -0-09
FNMA 3.5
104-18 : -0-06
FNMA 4.0
106-23 : -0-03
Treasuries
2 YR
0.6501 : +0.0441
10 YR
2.0310 : +0.0590
30 YR
2.6379 : +0.0659
Pricing as of 2/26/15 6:43PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:35PM  :  ALERT ISSUED: Negative Reprices Now a Relative Certainty as Corporate Locks Hit Hard
2:55PM  :  ALERT ISSUED: Slightly More Negative Reprice Risk Now
1:06PM  :  ALERT ISSUED: 7yr Auction was Bad; Some Risk in Play
12:56PM  :  Quick 7yr Auction Preview
10:11AM  :  Reprice Risk Dries Up For Now
9:45AM  :  ALERT ISSUED: Moderate Negative Reprice Risk for a Few Early Lenders
9:17AM  :  Bond Markets Shed Overnight Gains After Stronger Data
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "bump in the road, assuming that's what it is. But there's no secret decoder ring that says that's all that's in play. All we can see is that these deals are pricing and Treasuries are selling. The issuing firms don't HAVE to hedge that way, but it's usually the case. "
Joshua Cederlof  :  "when we see a corporate issuance like this, should it be considered a trend affecting occurrence or a bump in the road?"
Matthew Graham  :  "Big day for corporate debt issuance. Roughly $10bln now. Companies locking in rates on the dip. That's exacerbating the weakness."
Matthew Graham  :  "http://mbspric.es/1GxQurX"
Matthew Graham  :  "i saved a clip for the recap"
Matthew Graham  :  "pretty much"
Robert Madden  :  "Did the triangle come down because it was too depressing?"
Andrew Horowitz  :  "exactly my level of concern Chiz"
Steve Chizmadia  :  "GDP concerns me a bit. 2.1 is a low bar."
Andrew Horowitz  :  "still have GDP to leap tomorrow and Chicago "
Victor Burek  :  "Santelli gave it d+ too"
Matthew Graham  :  "D+"
Matthew Graham  :  "RTRS - PRIMARY DEALERS TAKE 37.15 PCT OF U.S. 7-YEAR NOTES SALE, DIRECT 10.54 PCT AND INDIRECT 52.32 PCT"
Matthew Graham  :  "RTRS - U.S. 7-YEAR NOTES BID-TO-COVER RATIO 2.37, NON-COMP BIDS $9.73 MLN"
Matthew Graham  :  "RTRS- U.S. SELLS $29 BLN 7-YEAR NOTES AT HIGH YIELD 1.834 PCT, AWARDS 54.12 PCT OF BIDS AT HIGH"