MBS RECAP: Bonds Back In The Game, Largely Thanks to Europe

By: Matthew Graham

European market levels and the global market considerations inspired by news out of Europe served as the driving forces behind much of today's bond market gains in the US.  This began gradually over the past several days as several analysts/economists have suggested that the ECB is hinting at expanding its easing programs. 

This wasn't enough to save equities markets though.  Stocks are keying in on bigger picture drama, even when it's fueled by temporary, and unexpected headlines, such as the the Volkswagen scandal.  This did particular damage to European equities at a time when the technical landscape in many major stock exchanges can ill afford it (starting to look like stocks are breaking below support levels).  As if it needed to be said, IMF Director Lagarde confirmed as much in comments this afternoon, saying that Chinese growth and Fed normalization both pose downside risks to global growth. 

US equities futures followed European equities lower overnight, and European bond yields led the charge for Treasuries and MBS.  Helping to grease the skids was the fact that corporate issuance was slightly lighter today vs yesterday.  Bonds had no further reasons to rally after Europe closed, but managed to drift sideways without any major reversal into the afternoon.


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
100-30 : +0-11
FNMA 3.5
104-01 : +0-08
FNMA 4.0
106-18 : +0-06
Treasuries
2 YR
0.6780 : -0.0323
10 YR
2.1320 : -0.0670
30 YR
2.9400 : -0.0760
Pricing as of 9/22/15 4:34PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:27AM  :  'Risk-Off' Move Intact, Helping Bond Markets Hold Gains

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Kevin Danforth  :  "I agree with Sung that the actual written guideline says verified receipt over 24 months so if none was paid for 2013 it would be an exception to use less then the required timeframe "
Sung Kim  :  "anything less than a 24 month contiguous history is underwriter discretion"
Thomas Nelson  :  "2 year bonus does not need to be calendar year (jan-dec), if your voe shoes the timeframe as continuous (oct-sept)....you can use it"
Clayton Sandy  :  "Dirk, this was a change a few months ago. You should be good to go with a lease and deposit receipt. Reserves are just two months for each"
Sung Kim  :  "no history, no equity"
DIRK POSTUPACK  :  "what is the rule on buying a new primary and keeping the current primary as a rental? i.e can we count rent against current PITI (most likely >70ltv) and reserve requirement? Does not have prior landlord history."