MBS RECAP: Strong Start, Weak Finish

By: Matthew Graham •
  • Bond markets stronger overnight
  • New 2-week lows in 10yr yields, but weaker bounce after ISM
  • Biggest issue with ISM was Prices Paid (63.5 vs 59.8), but headline didn't help either (51.3 vs 50.4)

10yr yields were as low as 1.804 this morning as traders took "risk-off" positions to begin the new month.  In other words, bond yields were moving lower with stocks and oil prices.

Markets found their collective limit around 10am when the ISM Manufacturing data came out stronger than expected.  The inflation component was stronger too, making for one less hurdle between the Fed and the stated goal of hiking some time in the next few meetings.  

Despite the intraday losses, 10yr Treasuries actually hit the 3pm close in better shape than yesterday--even if only slightly.  MBS were roughly unchanged at the same time.  But lenders put out rate sheets when MBS were 5-6 ticks higher, so several lenders repriced with the afternoon losses (even though the losses merely brought MBS back to 'unchanged'). 

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
102-12 : +0-01
Treasuries
10 YR
1.8410 : +0.0070
Pricing as of 6/1/16 4:44PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:26PM  :  ALERT ISSUED: Negative Reprice Risk Increasing as MBS Break Into Red
12:00PM  :  ALERT ISSUED: On The Edge of Negative Reprice Risk Territory
10:17AM  :  Yields Find Bottom After Stronger ISM Data
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Oliver Orlicki  :  "yes"
Adam Dahill  :  "sorry to bug with an UW question. Am I correct in in saying a rate and term after a cashout is considered R/T if previous loan was seasoned for 6 months? Agency product"
John Rodgers  :  "exactly"
Matthew Graham  :  "Hit the reset button and reapproach as if it were an SFR--all parties. If they can come up with a way to do it as an SFR, then it can make sense. Otherwise, they're trying to make lemonade with apples and oranges."
Joel Marks  :  "Two people buying a duplex where they will each occupy a unit. One is paying cash for his portion and the other needs financing. Not sure how this works since the all-cash guy will be on title and not on the loan, but his money toward the purchase is not a gift to the borrower."