MBS UPDATE: ILLUSTRATING CHANGE IN SENTIMENT

By: •

We are now in after hours MBS trading...

APRIL FN30_____________________________

FN 4.0 -------->>>> -0-07 to 100-09 from 100-16

FN 4.5 -------->>>> -0-05 to 102-00  from 102-05

FN 5.0 -------->>>> -0-03 to 102-29 from 103-01

FN 5.5 -------->>>> -0-01 to 103-16 from 103-17

FN 6.0 -------->>>> +0-03 to 104-03 from 104-00

APRIL GN30______________________________

GN 4.0 -------->>>> -0-05 to 100-17  from 100-22

GN 4.5 -------->>>> -0-08 to 102-05 from 102-13

GN 5.0 -------->>>> -0-03 to 103-13 from 103-16

GN 5.5 -------->>>> -0-01 to 103-28 from 103-29

GN 6.0 -------->>>> +0-01 to 104-05 from 104-04

To illustrate the slow and steady change in coupon sentiment check out this graph of the FN 4.0 price vs FN 6.0 price since the Fed released their statement on Wednesday...notice the 4.0's slow and steady decline while the 6.0 manages to remain close to post-FOMC highs.

To add to that argument the short side of the stack has been moving wider vs. TSYs today whereas the 6.0 coupon is slightly tighter. UP IN COUPON! Lets wait and see if the spread between the FN 4.0 and the FN 6.0 continues to gap out again...

AND NO THIS DOES MEAN MORTGAGE RATES WILL SHOOT UP TO 6.00%...the Federal Reserve has made it clear they will continue to provide support of production supply MBS.