MBS MID-DAY: Selling Pressure Picks Up Despite Econ data and Auction

By: Matthew Graham

Consumer Confidence numbers were much weaker than expected this morning at 95.2 vs 102.5 forecast.  Normally, this would be a big benefit for bonds.  While it did provide a temporary boost, the predominant momentum today has been toward higher rates. 

The weakness began before the data, right around the time that domestic bond markets come online fully at the 8:20am CME open.  Before that, overnight fluctuations in European markets had little effect and Treasuries were little changed.  Indeed, both Treasuries and MBS opened at unchanged levels before beginning the slide around 830am.

The 5yr auction, like the Confidence data, was favorable for bonds--or at least it would have been under normal circumstances.  This time around, it only made for a brief blip back towards stronger levels before the same selling momentum continued.  Several lenders have crossed into "reprice risk" territory where there's more than and eighth of a point between current prices and those in force when they put out this morning's initial rate sheets.


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
102-02 : -0-08
FNMA 3.5
104-30 : -0-07
FNMA 4.0
106-29 : -0-04
Treasuries
2 YR
0.5550 : +0.0300
10 YR
1.9720 : +0.0460
30 YR
2.6660 : +0.0490
Pricing as of 4/28/15 1:34PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
1:24PM  :  ALERT ISSUED: Reprice Risk Continues Building as Strong Auction Fails to Stem Selling
12:40PM  :  ALERT ISSUED: Slight Increase in Negative Reprice Risk for Some Lenders
9:22AM  :  Bond Markets on The Run, Before and After Case Shiller Data

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Ira Selwin  :  "http://mndne.ws/1zjERWH"
Ira Selwin  :  "Mortgages with fewer than six months of payment history are not eligible for cash out refinances"
Ira Selwin  :  "4155.1 3.B.2.b"
Dustin McAlister  :  "fewer than 12 months preceding the date of the loan application is limited to the lesser of 85% of the appraiser’s estimate of value, or---- sales price of the property when acquired Note: The sales price does not need to be considered if the property was acquired as the result of inheritance and is, or will become, the heir’s principal residence. "
Dustin McAlister  :  "can use the current value on a jumbo fha cash-out to 85% versus the purchase price back on 12/1/2014"
Matthew Graham  :  "RTRS- US FEB HOME PRICES IN 20 METRO AREAS +0.9 PCT SEASONALLY ADJ (CONSENSUS +0.8 PCT) VS +0.9 PCT IN JAN -S&P/CASE-SHILLER"
Matthew Graham  :  "RTRS - US FEB 20-METRO AREA HOME PRICES +5 PCT (CONSENSUS +4.7 PCT) FROM YEAR AGO -S&P/CASE-SHILLER"
John Tassios  :  "My 2 cents, yields fairly valued at these levels based on current events and current data. however, with Euro and JPY QE ongoing, aging population, stagnate GDP , and NO inflation - yields will slowly continue to fall. But...there will volatility and bad selloff days along the way. "