MBS RECAP: Bonds Hold Very Much Inside Yesterday's Range

By: Matthew Graham •
  • Bond markets grudgingly gave up some gains, but only relative to previous close
  • Relative to yesterday's average trading levels, today was flat
  • No impact from GDP or Consumer Confidence
  • Post-Brexit trade continues to drive markets

With yesterday's highest 10yr yield of 1.526, today's high of 1.483 was scarcely threatening.  If we look only at domestic session trading levels, it was a true "inside day" (meaning today's range was contained inside yesterday's range).  All this to make a case for today being flat and indecisive, despite the presence of red on trading screens.

Bonds won't be able to win every day, and frankly, I'm impressed they've remained as strong as they have, considering the ground they've covered.  It's a testament to the gravity of the Brexit topic, which continues to generate more speculation than concrete analysis. 

This is especially true for bond markets, apparently, as equities markets moved higher into the close without bonds following.  Part of the resilience could be the necessity for money managers to be holding a certain mix of bonds for the important quarter-end mark coming up on Thursday (quarter-end is just a bigger, more serious version of month-end).  

The more disconcerting prospect is that today is the second day spent NOT breaking into new low yields in 10yr Treasuries, and thus another step in setting us up for a bounce.  Still, I'd wait until yields broke above 1.48, or even 1.53 before getting too concerned about such things.

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
103-19 : -0-02
Treasuries
10 YR
1.4650 : +0.0050
Pricing as of 6/28/16 5:11PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:10AM  :  Half-Hearted Post-Brexit Bounce Attempt Not Too Troubling For Bonds
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Ben Biscoe  :  "if its 0 on the credit and ratios are good with a 1% payment just use that and call it a day"
Ben Biscoe  :  "When a monthly payment on an installment debt is not reported on the credit report or is listed as deferred, the Seller must obtain documentation verifying the monthly payment amount included in the monthly debt payment-to-income ratio. If no monthly payment is reported on a student loan that is deferred or is in forbearance, and there is no documentation in the Mortgage file indicating the proposed monthly payment amount (e.g., the loan verification letter), 1% of the outstanding balance will be considered to be the monthly amount for qualifying purposes."
Andrew Horowitz  :  "Can't use IBR letters any longer"
William McGuirt  :  "The IBR letter states the payment if they were to start today would be $354. DTI is fine with this pmt but borrower said another lender would not use the IBR letter."
William McGuirt  :  "So I read through the Chat Archives and still have a question. Student loans deferred for two more years. Has an IBR letter. Can I go Freddie?"