MBS RECAP: Quiet, Flat, But Slightly Ominous, Depending on Your Outlook

By: Matthew Graham

Bond markets had an exceedingly acceptable day.  MBS and and Treasuries were generally in stronger territory by the end of the day, but by too small a margin to make much fuss. 

NOTE: Today was the roll for Fannie and Freddie 30yr coupons.  That means that December coupons are no longer trading and that we'll now take our price indications from the next coupons in line (January).  The subsequent delivery month in any MBS coupon will always be lower in price because investors wait an additional month before getting their first payment.  In other words, prices look like they jumped lower, but they have not.

We saw a good mix of supportive and ominous cues from a technical perspective today.  Bond bulls will appreciate that we held on to yesterday afternoon's weakest levels as support (2.24-ish in terms of 10yr yields, or 103-15 in terms of Fannie 3.5s).  Pessimists will note that we were unable to break yesterday's best levels--the same resistance that blocked further progress in late November (i.e. 10yr yields around 2.20).

Through it all, there weren't any major clues or arguments in favor of either worldview.  We can very likely infer that traders are circling the proverbial wagons heading into next week's FOMC Announcement.  Everyone knows what's going to happen, but no one knows what the collective reaction will look like.


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
100-06 : -0-06
FNMA 3.5
103-11 : -0-07
FNMA 4.0
105-29 : -0-07
Treasuries
2 YR
0.9390 : +0.0040
10 YR
2.2290 : -0.0070
30 YR
2.9640 : -0.0010
Pricing as of 12/8/15 7:11PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:53PM  :  ALERT ISSUED: Back Near Weakest Levels; Reprice Risk Remains/Returns
10:11AM  :  ALERT ISSUED: Negative Reprice Risk Increasing For Some Lenders

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Brian McFarlane  :  "4% with a discount point"
Brian McFarlane  :  "yep"
Ted Rood  :  "Complete with no MI?"
Brian McFarlane  :  "This should end up well"
Brian McFarlane  :  "San Francisco Federal Credit Union on Tuesday announced that it is offering no-downpayment purchase mortgages with loan amounts of up to $2.0 million"