MBS UPDATE: Slow Flows in Defensive Market

The Dow is a few points off its session lows and benchmark TSY notes are bouncing around a narrow trading range (albeit close to intraday price highs). Rate sheet influential MBS coupon trading flows are very light (low volume) this morning...this sluggish MBS environment is creating some volatile price behavior....

As the FN 4.0 ventures into par territory (over 100-00) and the FN 4.5 creeps closer to 102-00....look for originators to start locking in their profits by putting their pipeline loans on the market for bid. This mortgage banker supply, if dumped today, should be met by Fed block buying which will return any lost liquidity to the marketplace.

This low volume marketplace is however keeping MBS buyers on the defensive...you should be feeling the same! BEWARE OF REPRICE ALERTS!

Since 5pm "Going Out" Marks....

FN30________________________________

FN 4.0 -------->>>> +0-01  to 99-31  from 99-30

FN 4.5 -------->>>> +0-01  to 101-24  from 101-23

FN 5.0 -------->>>> +0-01  to 102-20  from 102-19

FN 5.5 -------->>>> +0-01  to 103-15  from 103-14

FN 6.0 -------->>>> +0-02  to 104-23  from 104-21

GN30________________________________ 

GN 4.0 -------->>>> +0-02  to 100-02  from 100-00

GN 4.5 -------->>>> -0-01   to 101-29  from 101-30

GN 5.0 -------->>>> -0-01   to 103-09  from 103-10

GN 5.5 -------->>>> +0-02  to 103-29  from 103-27

GN 6.0 -------->>>> +0-04   to 104-22  from 104-18

UST10YR: 3.1875%

2s/10s: 228.44 bps

DOW: -12   to 8406