MBS RECAP: Stocks and Bonds Hold Narrow, Indecisive Ranges

By: Matthew Graham •

During all but the first few hours of the overnight session, US bond markets were under pressure today.  It wasn't too terrible though.  The initial motivation for the weakness was the fact that the European bond market rally finally had to come up for air.  It had been rallying aggressively since Fed day, and was nearly back to August's low yields this morning (only 4-5bps away).  For the sake of comparison, 10yr Treasuries are more than 20bps away from their late August lows.

European bond markets never made any overly-threatening moves back in the other direction, but that didn't stop US bond markets from continuing to drift into higher rates.  By the 10am hour, it looked like we might have been shaping up for a pretty rotten day. 

At 1030am, the weekly oil inventory data came out, sending oil prices tumbling.  Stocks and bonds did as little as they could to acknowledge the move, but that was enough to help MBS and Treasuries establish support for the rest of the day.  The net effect was the narrowest trading ranges since pre-Fed Wednesday of last week.

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
100-26 : -0-04
FNMA 3.5
103-30 : -0-04
FNMA 4.0
106-15 : -0-03
Treasuries
2 YR
0.6990 : +0.0210
10 YR
2.1530 : +0.0210
30 YR
2.9480 : +0.0050
Pricing as of 9/23/15 4:36PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:37AM  :  ALERT ISSUED: Some Negative Reprice Risk For Early Lenders
10:32AM  :  Bond Markets Continue Struggling With Overnight Weakness
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "B+"
Matthew Graham  :  "RTRS- U.S. 5-YEAR NOTES BID-TO-COVER RATIO 2.57, NON-COMP BIDS $34.52 MLN"
Matthew Graham  :  "RTRS- U.S. SELLS $35 BLN 5-YEAR NOTES AT HIGH YIELD 1.467 PCT, AWARDS 78.98 PCT OF BIDS AT HIGH"
Matthew Graham  :  "5yr Auction Preview: Recent average bid-to-cover has been 2.44. Yield performance vs expectations has been mixed with a slight bias to come in higher than expected. Today's is expected at 1.474 based on 1pm 'when-issued' trading. Indirect bidding has averaged 58%."
Compliance is Watching Me  :  "I don't see why VA would have a problem, as long as you can prove that the assessment cannot jump the mortgage in case of non payment. Similar to how VA looks at HOA dues."
David J Dorn  :  "Anybody know VA's stance on refinance with a HERO tax loan? I am aware FNMA/FHLMC/FHA do NOT allow it. Perhaps GNMA does?"
Matthew Graham  :  "Depends how your lender normally reprices. There is less risk now, in general, with the improvements since 11am. If you lender is typically slow to reprice, then you could consider waiting. Either way, I like the approach of making the decision only about TODAY and not about predicting the future. "
Victor Burek  :  "should be low risk of reprices for worse right now"
Victor Burek  :  "that's not a bad idea...10 year seems unable to break lower"
Arman Ghamami  :  "*not today...later today or now?"
Arman Ghamami  :  "im floating a fannie mae 30 year..shoudl I lock today?"