MBS RECAP: Bonds Maintain Range Amid Holiday-Week Slowness

By: Matthew Graham •

Traders punched the clock, made their trades, and went home today.  Before the clock-punching, there was the overnight session, in which European bond markets sold off at a fairly healthy pace.  German Bunds were 7bps weaker from trough to peak.  During the same time, overnight Treasury trading only lifted 10yr yields 3bps. 

As soon as domestic traders got in, bonds began to recover.  The biggest giveaway with respect to today's illiquid, uninspired grind was the fact that the bounce back happened right after a large chunk of domestic bond market participants began their trading day (820am CME open).  This was enough to get bonds back near 'unchanged' levels, though Europe continues to be a drag.

Once Europe was closed for the day, domestic bond markets improved into the afternoon.  A strong 2yr auction didn't hurt the case, but I'd emphasize that it wasn't as much of a driver of trade as the chart might make it seem.  Virtually all of today's gains can be accounted for by the onset of domestic tradeflows balancing out European weakness, followed by domestic tradeflows being left to their own devices after Europe closed.

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
100-07 : +0-02
FNMA 3.5
103-11 : +0-01
FNMA 4.0
105-30 : +0-01
Treasuries
2 YR
0.9260 : +0.0050
10 YR
2.2430 : -0.0210
30 YR
2.9990 : -0.0233
Pricing as of 11/23/15 5:35PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:31AM  :  Trying to Avoid Another Swoon After Morning Comeback
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "definite theme building here."
Matthew Graham  :  "So that's Bullard, The Minutes, and now Yellen talking about some iteration of "stuck at low rates.""
Andy Pada, Jr.  :  "low and slow; that is the tempo"
Matthew Graham  :  "RTRS - YELLEN SAYS OVERLY AGGRESSIVE INCREASE IN RATES WOULD AT MOST BENEFIT SAVERS ONLY TEMPORARILY"
Matthew Graham  :  "RTRS - YELLEN SAYS OVERLY AGGRESSIVE RATE HIKE COULD BRING ABOUT LASTING RETURN TO LOW RATES"
John Paul Mulchay  :  "Ramona, looks like alimony considered debt by fnma. B3-6-05"
Ramona Hall  :  "Happy Monday guys :) quick question....does Fannie Mae allow us to deduct Alimony from income vs adding it to the liabilities?"
Jason York  :  "Use the prospective rental income only to offset the mortgage payment on the rental property and only if there is no indication that the property will be difficult to rent. This rental income may not be included in effective income"
Michael Ullmann  :  "for a VA loan converting a primary to a rental, I can only offset the mortgage payment? Can not count additional income beyond offsetting the payment? Anyone know if this a VA rule or an overlay I am reading"