MBS RECAP: Unchanged in The End, Despite Apparently Busy Calendar

By: Matthew Graham •

Greek votes, German votes, European official comments, Draghi Press conference, Jobless Claims, NAHB, Philly Fed, Greek bridge loans, and more congressional testimony with Yellen...

Is it possible that all of these events just happened to be in a level of balance that left bond markets perfectly unchanged?  Maybe, but I think a more fair assessment would be to say that none of today's events are really jumping out in front of the others in terms of clearing up uncertainty.

Economic data tends to get more of a look when confusing global events are producing an analytical stalemate.  To that end, today's Philly Fed Index was our best friend.  Bond markets came into the day in slightly weaker territory, but saw solid gains after Philly Fed, and didn't do much else for the rest of the session.  Yellen offered no new insight as to the Fed's policy path, and while progress was ostensibly made on Greece's bailout, it's still such a complex, time-consuming process that there's little sense in markets trading it like it's a "one-and-done" event.

Fannie 3.5s ended 2 ticks higher and 10yr yields were perfectly unchanged.  Germany hadn't gotten around to voting on the Greek bailout by the time markets closed, but it's expected to happen by tomorrow.  That could be when we see the European situation start to affect domestic markets a bit more.  That would be par for the recent course where Fridays and Mondays have been volatility central.

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
99-16 : +0-02
FNMA 3.5
102-30 : +0-02
FNMA 4.0
105-26 : +0-01
Treasuries
2 YR
0.6610 : +0.0280
10 YR
2.3560 : +0.0000
30 YR
3.1140 : -0.0280
Pricing as of 7/16/15 6:24PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:33AM  :  Holding Modestly Weaker Levels in Spite of Challenges
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Timothy Baron  :  "From http://mndne.ws/1I6TGiZ"
Timothy Baron  :  "Here you go: "If the combined total net rental income for all rental properties is positive, DU adds the net rental income to the qualifying income. If the total is negative, DU treats the loss as a liability and includes it in the debt-to-income ratio.""
Brent Borcherding  :  "Anyone have a great idea here: I have a client with a commercial building that the list on Schedule E. It was empty in 2014 and will remain empty this year due to remodeling. It's owned free and clear, but using the fannie calculation (again, on schedule E) it's a -2500 a month loss. If we calculate this as a debt, DTI is 64%. Reduction in income puts them under 44%. We're required to calculate as debt,correct? Anyone view this differently, fannie vs freddie.....lender?"
Matthew Graham  :  "at this point, it looks like we've avoid the big "magic wand, POOF! Greece is fixed" hit to bond markets. Increasingly looks to be no magic wand for Greece."
Matthew Graham  :  "Greece could easily go to elections in the next month or so"
Matthew Graham  :  "Fed Funds futures are centered on January now vs September."
Matthew Graham  :  "Long story short, Greece is an ongoing deal. They got bridge money, but they still have to implement reforms. Most of the pain was priced in on Friday and Monday. From there, domestic data helped a lot. The buzz is increasing that the Fed's hands may be tied if every central bank in the world is doing QE AND the US economy is stagnating. "
Matthew Graham  :  "this is all I've been writing about for the past 2 days. You can always browse commentary here: http://mndne.ws/1u7jULc"
Chris Patrikian  :  "Okay I am bit confused can someone drop some knowledge as to why the bonds are reacting the way they are even through Greece/Iran both got paid. Is it strcitly dueto Yellen? "