MBSonMND: MBS MID-DAY
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FNMA 3.5
94-32 : -0-11
FNMA 4.0
98-30 : -0-10
FNMA 4.5
102-05 : -0-07
FNMA 5.0
104-29 : -0-05
GNMA 3.5
95-22 : -0-10
GNMA 4.0
100-04 : -0-09
GNMA 4.5
103-09 : -0-07
GNMA 5.0
105-32 : -0-05
FHLMC 3.5
94-27 : -0-10
FHLMC 4.0
98-26 : -0-08
FHLMC 4.5
102-01 : -0-08
FHLMC 5.0
104-24 : -0-04
Pricing as of 9:34 AM EST
Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard .
10:30AM  :  Stocks Slide To Lows As Bonds Catch Support
With only 26 minutes having passed since the data that threatened to push bonds out of their recent range, we're still in the "so far so good" stages of a potentially developing support bounce for bonds that could be marked in line with the highest 10yr note yields this month at 3.42. Since ticking into that level momentarily, yields are back to hovering around 3.41 as the S&P slid from 1281 to 1275, in line with it's weakest levels just after the open. If stocks bounce here and make some sort of strong "double bottom," bonds may take this negatively enough that the prospects of rallying off a support bounce are grim. It's still very much anybody's game so far this morning, but at least we're IN the game. FNCL 4.5's are at 102-04.
10:08AM  :  ALERT: First Reactions To Data
Bond markets weakened slightly following the release of 7am econ data. 10yr yields moved to test a band of high yields ranging from Tuesday's highs just under 3.41 and highs from the 12th just over 3.41. So far, that support is holding, but it's too early to say if this will continue to be the case. Reprice pressure exists among lenders that already released rates this AM, and increasingly so if 10's crest 3.41 and 4.5's approach 102-00
10:06AM  :  ALERT: U.S. DEC LEADING ECONOMIC INDICATORS +1.0 PCT (CONSENSUS +0.6 PCT) VS NOV +1.1 PCT
U.S. DEC LEADING ECONOMIC INDICATORS INDEX AT RECORD HIGH 112.4 (Source: Reuters)
10:04AM  :  ALERT: PHILADELPHIA FED BUSINESS CONDITIONS JANUARY 19.3 VS DEC 20.8
NEW ORDERS INDEX 23.6 IN JAN VS 10.6 IN DEC // PRICES PAID INDEX 54.3 IN JAN VS 47.9 IN DEC // EMPLOYMENT INDEX 17.6 IN JAN VS 4.3 IN DEC // 6-MONTH BUSINESS CONDITIONS INDEX 49.8 IN JAN VS 55.4 IN DEC
10:02AM  :  ALERT: US DEC EXISTING HOME SALES 5.28 MLN UNIT ANNUAL RATE (CONS 4.85 MLN) VS NOV 4.70 MLN (PRV 4.68 MLN)-NAR
US DEC EXISTING HOME SALES +12.3 PCT (CONS +4.8 PCT) VS NOV +6.1 PCT (PREV +5.6 PCT)-NAR // US DEC INVENTORY OF HOMES FOR SALE -4.2 PCT TO 3.560 MLN UNITS, 8.1 MONTHS' SUPPLY-NAR // US DEC NATIONAL MEDIAN PRICE FOR EXISTING HOMES $168,800, -1.0 PCT FROM DEC 2009-NAR // US NAR SAYS 36 PCT OF U.S. DEC EXISTING HOME SALES WERE DISTRESSED SALES VERSUS 33 PCT IN NOV // US 2010 EXISTING HOME SALES -4.8 PCT TO 4.908 MLN UNITS, LOWEST SINCE 1997, FROM 5.156 MLN IN 2009 // NAR CHIEF ECONOMIST YUN FORECASTS 2011 EXISTING HOME SALES AT AROUND 5.2 MLN UNITS
9:27AM  :  Meanwhile, MBS Have Already Matched Their AM Lows
10yr notes may be a few thousands away from their weakest levels of the morning, but the same is not holding true for 5yr notes or 4.5 FNCL's. Both are currently testing those lows with the 5yr at 1.9998 and FNCL 4.5's just a shade over 102-05.
9:23AM  :  Bonds Stuck Between Recent Support And Resistance
10yr yields did encounter their first meaningful support at the previously discussed 3.407 level, but on the rebound, a somewhat well-traveled pivot this week (3.37+) is offering some resistance. This sent yields back in the 3.40+ direction but the story has yet to play out. It might not play out before 10am data, and even if it does, it's likely that 10am data will take yields outside of this narrow morning range-bind.
9:13AM  :  10:00am Data: Existing Home Sales, ECI, and Philly Fed
In a little less than an hour, 3 more pieces of economic data will be released. Existing home sales for December is forecast to be up 4.8% to an annual pace of 4.85 million. November printed up 5.6% at 4.68 million. Leading indicators are seen coming in at 0.6%, a half a point drop from Novembers 1.1%. Finally, Philly Fed's business index is also forecast to have dropped half a point from 20.8 to 20.3. The range of estimates on the latter was 12.5 - 26.4
8:45AM  :  Support Levels To Watch Following Post-Jobless Claims Weakness
Using 10yr notes as a benchmark, there are two support levels to watch as rates move higher this AM. The first, and most recent, is the point that began the 2-day trend channel lower in yields at 3.4072. This level is effectively so far being tested and although the outcome remains uncertain, has at least been supportive so far. After that, the next highest yield seen in recent weeks came on the 12th when 10's hit 3.4178. This band of yields near 3.40 marks the midpoint for a larger 2011 range between 3.3 and 3.5
8:35AM  :  ALERT: Weak Start For Treasuries And Weaker Still After Jobless Claims
10yr yields zoned in at 3.36 this morning before jobless claims data and in the few minutes since the release printed better than expected results, they are up to 3.38, in line with yesterday's highest yields. FNCL 4.5's are at 102-08, down 4 ticks from last night's close, setting the stage for weaker pricing this morning.
8:33AM  :  ALERT: US JOBLESS CLAIMS FALL TO 404,000 JAN 15 WEEK (CONSENSUS 420,000) FROM 441,000 PRIOR WEEK (PREVIOUS 445,000)
US JOBLESS CLAIMS 4-WK AVG FALLS TO 411,750 JAN 15 WEEK FROM 415,750 PRIOR WEEK (PREVIOUS 416,500) // US JOBLESS CLAIMS 4-WK AVG FALLS TO 411,750 JAN 15 WEEK FROM 415,750 PRIOR WEEK (PREVIOUS 416,500) // US CONTINUED CLAIMS FALL TO 3.861 MLN (CON. 3.925 MLN) JAN 8 WEEK FROM 3.887 MLN PRIOR WEEK (PREV 3.879 MLN) // US INSURED UNEMPLOYMENT RATE UNCHANGED AT 3.1 PCT JAN 8 WEEK // US CONTINUED CLAIMS LOWEST SINCE OCT 2008 (Source: Reuters)
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard .
Wilkin Rodriguez  :  "AQ what we have been instructed in retail world is that we have 72 hours to redisclose any additional fees that exceed the 10% tolerence within 3 days on knowledge or it will be have to be absorbed through lender subsidy, so you have to let the borrower know of this within 3 days of gertting the title and title bill, that should give you enough time to get the borrower a legitimate title co"
Jason York  :  "what AQ is saying is that the realtor is making the customer use a title company that isn't on that list, so the 10% tolerance doesn't apply, so the title fees can be a lot higher"
Adam Dahill  :  "exactly BB, no signature on GFE so how can you prove anything?"
Brett Boyke  :  "the borrower signed the GFE, so they acknowleded the fees"
Chris Kopec  :  "Page 4 of the GFE is the Service Provider's list.... it includes all 3rd parties that I would recommend, including title agents, attorneys, pest inspectors, home inspectors, etc."
Jason York  :  "well put AQ, it is rather annoying when I have customers being told who to use"
Chris Kopec  :  "AQ.....Page 4 of the GFE is the place to combat this."
Adam Quinones  :  " Here's an interesting, but out-of-my-expertise, note that I had received about Realtors and settlement costs. "We are seeing that realtors are requiring certain title agents to act as the closing agent with the lender having no say. These realtors and closing agents make the borrower believe that it is a requirement of the bank, or in many cases Fannie Mae who owns the property, when this is not true. The closing agent then charges $1,700 in settlement fees to the buyer on the closing statement"
Adam Quinones  :  "its hurting both consumers and producers at this point"
Adam Quinones  :  "THE GREAT MARGIN SQUEEZE OF 2011: http://www.mortgagenewsdaily.com/mortgage_rates/blog/194343.aspx"
Adam Quinones  :  "mutter mutter..."
Adam Quinones  :  "which doubled"
Adam Quinones  :  "yes it could have...but if it were me...that savings wouldve gone toward my electric bill"
Adam Quinones  :  "on your 2nd question: could monthly savings have increased consumer spending?"
Adam Quinones  :  "the curve extended and prepay speeds slowed which extended the life of production MBS coupons and drove yields higher at a faster rate"
Adam Quinones  :  "snowballing"
Adam Quinones  :  "that was extension risk/convexity risk"
John Rodgers  :  "Adam, could the glut of refis in Oct/Nov have exasperated the selloff in MBS because of originator supply hitting the market? Could all those folks that refinanced just went out and bought ipods (rhetorically speaking) with their one month mortgage payment amnesty giving the economy a short respite?"
Matthew Graham  :  "need to make it through 3.39+ for technical confirmation of that"
Matthew Graham  :  "looking good for bouncing at the moment"
Brett Boyke  :  "with all this better than expected news, the stock market should be up"
Matthew Graham  :  "well, at least it doesn't hurt, except that if stocks and bonds are down at the same time, and money is flowing out of the market, it's more of a "phantom force" that does not as easily lend itself to predictive analysis"
Victor Burek  :  "and stocks still in red... that shouldl help"
Matthew Graham  :  "Each passing moment where 10's fail to tick into the 42's constitutes another small psychological victory for support levels"
Mike Drews  :  "I would think that the support here on the 10 would be pretty strong"
Matthew Graham  :  "that 3.42 mark from the 12th is being well defended so far"
Matthew Graham  :  "if we hold that, or even close to it, it's actually a really big net positive from a technical perspective"
Dirk Postupack  :  "Matt....I cannot tell you you how many times I floated rates and got my clients a better rate due to this site.........."
Dirk Postupack  :  "I wish we had that crystal ball to predict but thank god we have this"
Matthew Graham  :  "Bob, I don't think we can really assign specific amounts of bps and 32nds to the goodness or badness of any particular economic data. The fact is we have a report that relates to the labor market that is stronger than expected in a range bound environment where we just visited the stronger side of the range. Backing up to the midpoint is justifiable there regardless of the magnitude of the beat."
Robert Rippy  :  "MG, considering we are still looking at 404,000 in claims, does a 16,000 improvement over consensus justify the large movement this morning?"
Matthew Graham  :  "3.4072 is the high yield from Tuesday the 18th, and so far has acted as the first line of support"
Victor Burek  :  "stocks around the world selling off... yet no rush to treasuries"