MBS RECAP: Bond Buyers Back From 3-Day Weekend Sidelines

By: Matthew Graham

Heading into 3-day weekends, it's not uncommon for investors to move to the sidelines by selling some of their holdings with the intention of getting back into the market the following week. Right at the start of this week, we buyers return, with little to explain the move apart from that "sidelines" metaphor.

As the day progressed, the usual cues began to have more of their usual effect.  Specifically, stocks topped out just after 11am.  As they fell somewhat precipitously, bond markets found their inspiration to modestly extent the rally.  Relatively speaking, stocks moved quite a bit while bonds were generally flat after the morning gains.

The positive takeaway (other than the obvious green on the screen) is the fact that bonds accomplished the gains in the presence of a growing slate of corporate issuance.  That means corporations are expected to issue new debt this week--a process that was clearly begun today.  Corporate issuance tends to put pressure on Treasuries and--to a lesser extent--MBS. 

The pessimistic approach would be to focus on the technical levels we discussed this morning.  Simply put, there's resistance around current trading levels.  For instance, in terms of 10yr yields, 2.04% is the near-term floor.  The fact that we hit that overnight and were unable to break it throughout the domestic session is somewhat discouraging.


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
101-12 : +0-08
FNMA 3.5
104-09 : +0-05
FNMA 4.0
106-18 : +0-03
Treasuries
2 YR
0.6170 : -0.0240
10 YR
2.0420 : -0.0479
30 YR
2.8810 : -0.0412
Pricing as of 10/13/15 5:29PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:06AM  :  ALERT ISSUED: Modest Increase in Negative Reprice Risk
10:06AM  :  Corporate Issuance Pushing Back on Overnight Rally

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - ASKED IF RATES SHOULD RISE THIS YEAR, FED'S TARULLO SAYS WOULDN'T EXPECT IT TO BE APPROPRIATE"
Compliance is Watching Me  :  "The legacy system was not ready for TRID"
Compliance is Watching Me  :  "WF was doing HARP on their legacy LOS system along with C/P and 203 (k). Supposed to be back up sometime over the next week or so"
Andy Pada, Jr.  :  "how does a HARP loan affect TRID differently than any other r/t refinance?"
Sung Kim  :  "oh, they suspended those because of TRID"
Matt Hodges  :  "rehab lending, too"
Sung Kim  :  "WF knows something"
John Tassios  :  "does HARP expire end of 2015 or was it extended to 2016? "
Matt Hodges  :  "correct"
Andy Pada, Jr.  :  "just heard that WF will no longer do HARP loans, even ones in their own portfolio. can anyone confirm?"