Lock or Float Ahead of The Fed?

Ideally, you've been locking at app all month as the only argument for floating was out the window by the end of May.  For clients that remain unlocked for some reason or who just became eligible to lock this afternoon, it's a tough call.  When markets do what they've done over the past 3 days (not like there's a ton of precedent),and when lenders have priced as defensively as they have today, there's no denying the opportunity and temptation to try to catch falling knives.  But there's a reason for the metaphor.  It'll either be an epic party trick, or your new nickname will be stumpy.  More discussion on this in today's video.

Econ Data / Events

  • Fed MBS Buying 10am, 11:30am, 1pm

  • US Producer Price Index (PPI)
    Headline MM.... 0.8 vs 0.8 f'cast, 0.4 prev
    Core MM ..........0.5 vs 0.6 f'cast, 0.2 prev
    Core YY............8.3 vs 8.6 f'cast, 8.6 prev

Market Movement Recap
08:35 AM

Flat in Asia. Slightly stronger in Europe and after tame US PPI data.  10yr down 5bps at 3.31.  MBS up 10 ticks (4.5 coupon)

10:36 AM

Steady selling since 8:45am with bonds now in moderately weaker territory.  10s are up 3+ bps at 3.39+ and MBS are down between a quarter and 3/8ths of a point depending on liquidity.  No new news.  Just momentum

04:02 PM

Bonds stabilized into 2pm and then tanked shortly thereafter.  Big block sales at the CME added to the negative momentum.  MBS are off their lows now, but were down more than half a point (now only 44bps).  10yr yields are still near highs, up 11bps at 3.47.