MBS MID-DAY: Holding Ground After Weaker Morning

By: Matthew Graham

Bond markets lost ground overnight, moving resolutely higher in yield during the European session.  The Treasury weakness is notable in that it occurred amid flat-to-weaker trading in stocks.  After trading in close correlation to start the month, yields and stock prices are increasingly diverging.  This could be meaningful for some unknown reason, but more likely is the increased money-manager cash flow heading into the mid-month tax deadline.

This morning'sd Housing Starts data (1.206 mln vs 1.15 mln forecast) didn't do anything to stem the tide of weakness that had carried over from the overnight session.  By 10am, yields had topped out at 2.079 and Fannie 3.0 MBS hit their lowest levels at 101-13.  Both are little-changed since then, but have come back just a bit.

In the bigger picture, today's weakness is very much in line with the broader consolidation range highlighted in the Day Ahead (the dotted lines in the chart).  There were no takeaways from any of this morning's Fed speakers, leaving bonds to simply drift within that range.


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
101-15 : -0-06
FNMA 3.5
104-13 : -0-04
FNMA 4.0
106-22 : -0-02
Treasuries
2 YR
0.6290 : +0.0320
10 YR
2.0630 : +0.0400
30 YR
2.9130 : +0.0330
Pricing as of 10/20/15 12:55PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:39AM  :  Bonds Marching to Their Own Beat (in an Unfriendly Direction).

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
joon choi  :  "fha min is 500, lender overlay varies "
Skyler Fortune  :  "does anyone know what the FHA credit qualifying streamline minimum credit score is? "
Jason York  :  "to piggyback on MH, W-2 will often have his ship address, and his 1040 may have a parents address or other address he has all of his stuff mailed to"
Matt Hodges  :  "W-2 doesn't always match 1040. Ask client for 1040"
aaron meyer  :  "I have a borrower that was on active duty deployed last year. UW wants a 4506t executed but it keeps getting rejected stating the address doesn't match. I put the address on his W-2 which is probably a military address ... any thoughts?"
Matthew Graham  :  "RTRS - US SEPT HOUSING PERMITS 1.103 MLN UNIT RATE (CONSENSUS 1.164 MLN) VS AUG 1.161 MLN UNIT RATE (PREV 1.161 MLN)"
Matthew Graham  :  "RTRS - US SEPT HOUSING STARTS 1.206 MLN UNIT RATE (CONSENSUS 1.150 MLN) VS AUG 1.132 MLN UNIT RATE (PREV 1.126 MLN)"
Matthew Graham  :  "RTRS- US SEPT HOUSING STARTS +6.5 PCT VS AUG -1.7 PCT (PREV -3.0 PCT)"
Matthew Graham  :  "RTRS - US SEPT SINGLE-FAMILY STARTS +0.3 PCT TO 740,000 UNIT RATE; SINGLE-FAMILY PERMITS -0.3 PCT TO 697,000 UNIT RATE"
Matthew Graham  :  "that's definitely the consensus. I love it when everyone agrees on the next move."
Christopher Stevens  :  "MG- Been tough to break through 2.04 so this latest consolidation has me thinking we move higher before FOMC meeting. "