MBS RECAP: Fading Back to Unchanged After Stronger Start

By: Matthew Graham •

Markets have been doing a good job of reacting to economic data so far this week. That was a good thing again this morning as the data was weaker in general.  Bonds reacted accordingly and moved back toward yesterday's best levels.  Unfortunately, they never broke through yesterday's best levels.

While the trend of logical reactions to economic data should generally continue, it's not the only motivation.  Yesterday's dip in Treasury yields served as an enticement for corporations to issue debt.  This creates upward pressure for rates in several ways, not the least of which being that there is more supply of debt for Treasuries and Mortgage-Backed Securities to contend with.  Increased supply increases competition in the broader bond market, which hurts Treasuries and MBS.

That was part of our issue today.  The other issues aren't important as long as we look at the technical levels (though, for the record the biggest "other issue" is Europe, as discussed in detail on MBS Live today).  The technical picture is simple: 10yr yields have had trouble breaking through the 1.84-1.86 band of yields.  Until/unless they do, it makes sense to be defensive.

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
102-17 : +0-01
FNMA 3.5
105-06 : +0-00
FNMA 4.0
106-28 : -0-01
Treasuries
2 YR
0.5000 : -0.0160
10 YR
1.8900 : -0.0100
30 YR
2.5400 : -0.0030
Pricing as of 4/15/15 5:01PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:04PM  :  ALERT ISSUED: Negative Reprice Risk Increasing
2:17PM  :  ALERT ISSUED: Once Again, Bonds Under Pressure After European Close
9:40AM  :  Bonds Trading on Data and That's a Good Thing Today
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Jason Anker  :  "AB, wells and chase can do, with float downs. dont think this segment is very broker friendly"
Tom Schwab  :  "AB, I think Flagstar will do 270 day locks with upfront fee"
Clayton Sandy  :  "can float down 30 days from close to a .125% above current 60 day rate"
Clayton Sandy  :  "1/2 point fee upfront that goes toward costs. Use a 60 day rate and then add appropriate margin for chosen lock period"
Clayton Sandy  :  "BB&T has a good one"
Andrew Benson  :  "Hey everyone -- quick question -- we are wholesale (broker) -- anyone have a lender recommendation for someone that will do extended locks (120, 150, 180 days) for new construction? I've got a possible builder on-board, and both Wells Fargo and some local bank he has talked to offer such ridiculously long terms."
Matthew Graham  :  "RTRS - FED'S BEIGE BOOK SAYS U.S. ECONOMIC ACTIVITY CONTINUED TO EXPAND ACROSS MOST REGIONS FROM MID-FEBRUARY THROUGH END OF MARCH"
Matthew Graham  :  "I don't think they ever change the first newswire, except for the month. "
Matthew Graham  :  "never"
Victor Burek  :  "mg, guess no surprises from beige book"
Randall Brown  :  "Check with his tax preparer, but if you can prove financial hardship/insolvency the 1099c is non-taxable"
Jason Anker  :  "that’s simply the law. if he didn’t know it was coming he had very bad representation."
JEREMEY BECK  :  "i had a client get 1099 from chase on a short sale in 2014. nothing like kicking a guy when he's down....dirty pool!!!"
Michael Ullmann  :  "love receiving Zillow emails like this Dear Michael Ullmann, here is the invitation to change your spend on Zillow. Current: $84 per month New: $703 per month ""