MBSonMND: MBS MID-DAY
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FNMA 3.5
94-24 : -0-06
FNMA 4.0
98-22 : -0-06
FNMA 4.5
101-31 : -0-03
FNMA 5.0
104-25 : -0-03
GNMA 3.5
95-14 : -0-05
GNMA 4.0
99-30 : -0-06
GNMA 4.5
103-04 : -0-04
GNMA 5.0
105-31 : -0-05
FHLMC 3.5
94-19 : -0-06
FHLMC 4.0
98-17 : -0-05
FHLMC 4.5
101-27 : -0-03
FHLMC 5.0
104-19 : -0-03
Pricing as of 11:03 AM EST
Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard .
11:00AM  :  ALERT: Reprices Reported. Benchmark Support Holding
Although traders were quick to book a profit and sell short the 10 year note after a much stronger than expected read on Consumer Confidence, the mid-range pivot at 3.40% is providing support in benchmarks. Unfortunately the 5bp turn around has pressured production MBS coupon prices lower and reprices have been reported.
10:18AM  :  New MBS Commentary Post
10:16AM  :  ALERT: 10's Break Higher, 2 Day Lows For MBS, Reprices Possible
At 101-30, FNCL 4.5's are at their lowest level since Friday, making reprices for the worse highly likely from lenders who released rates before the Consumer Confidence Report. 10yr yields are at 3.4144, superseding most of yesterday's highs.
10:04AM  :  ALERT: Consumer Confidence Unexpectedly High. Pressure Is On.
US JANUARY CONSUMER CONFIDENCE INDEX 60.6 VS DEC REVISED 53.3 (PREVIOUS 52.5) - CONFERENCE BOARD // US CONSUMER CONFIDENCE INDEX MEDIAN FORECAST FROM REUTERS FOR JANUARY WAS 54.3 // US CONSUMER PRESENT SITUATION INDEX IN JAN WAS 31.0 VS DEC REVISED 24.9 (PREVIOUS 23.5) // US CONSUMER EXPECTATIONS INDEX 80.3 IN JAN VS DEC REVISED 72.3 (PREVIOUS 73.6) - CONFERENCE BOARD // US JOBS HARD-TO-GET INDEX 43.4 IN JAN VS DEC REVISED 46.0 (PREVIOUS 46.8) - CONFERENCE BOARD // JANUARY CONSUMER CONFIDENCE AND EXPECTATIONS INDEXES BOTH AT HIGHEST SINCE MAY 2010 // JANUARY CONSUMER INFLATION RATE EXPECTATIONS HIGHEST SINCE MATCHING 5.5 PCT IN JULY 2009 // JANUARY CONSUMER CONFIDENCE PRESENT SITUATION INDEX AT HIGHEST SINCE NOVEMBER 2008
9:55AM  :  ALERT: Pivot-Based Support Broken, MBS Fall
As expected, when 3.38 failed to hold up as support in benchmark 10yr treasuries, MBS were finally motivated outside their tight morning range and have since fallen 4 ticks to 102-01. While a 4 tick move, in and of itself, isn't usually enough for reprices, lenders who priced early may be perceiving bearish momentum in bonds and thus may reprice for the worse. There is not an extremely high risk of this being widespread unless 10am Consumer Confidence reactions cause the bond market to continue selling.
9:26AM  :  ALERT: Morning Bond Rally Meets Resistance
The notion of "meeting resistance" as stated above has, thus far, been a phenomenon that's relevant to treasuries but not as much to MBS. In 10yr note yields, a bounce at 3.35 is quite clear. 3.38 would be the obvious pivot point from yesterday's low yields, and holding that as support would be a bullish sign. 10's are currently at 3.3713. MBS on the other hand, are sideways, with the FNCL 4.5 at 102-05, a price from which it has not deviated more than a tick in either direction so far this morning. Be aware however, that if 10's break 3.38, MBS could finally start to show some life.
9:09AM  :  DATA FLASH: Case-Shiller HPI -0.5% in November
US NOV HOME PRICES IN 20 METRO AREAS -0.5 PCT SEASONALLY ADJ (CONSENSUS -0.8) VS -1.0 PCT OCT - S&P/CASE-SHILLER /// US NOV 20-METRO AREA HOME PRICES -1.0 PCT (CONSENSUS -0.9) VS -1.3 PCT IN OCT-S&P/CASE-SHILLER /// US NOVEMBER 20-METRO AREA HOME PRICES -1.6 PCT (CONSENSUS -1.4 PCT) FROM YEAR AGO -- CASE-SHILLER /// US HOME PRICES IN 10 METRO AREAS -0.8 PCT IN NOVEMBER VS -1.2 PCT IN OCT - S&P/CASE-SHILLER /// US NOVEMBER HOME PRICES IN 10 METROPOLITAN AREAS -0.4 PCT FROM YEAR AGO - S&P/CASE-SHILLER
8:40AM  :  Unexpected UK Contraction Boosts Bonds Early
Short covering and flight-to-quality bids picked up overnight on the UK contraction news. That momentum has trickled over into our domestic session as well. FNCL 4.5's are currently up 5 ticks on the day at 102-07, and 10yr benchmarks are down 4.44bps at 3.3596. First major data hits at 10am with Case Shiller and Consumer Confidence.
8:25AM  :  British economy suffers shock Q4 contraction
LONDON, Jan 25 (Reuters) - Britain's economy unexpectedly shrank in the last three months of 2010, causing a major headache for the government as it embarks on the deepest spending cuts in a generation. Finance minister George Osborne said the shock 0.5 percent contraction would not derail his austerity plans, blaming the drop in output on the harshest December weather on record. But even without the heavy snow, the economy would have struggled to register any growth, according to the Office for National Statistics, an assessment that spooked financial markets, sending the pound tumbling against the dollar
8:20AM  :  IMF: U.S. Housing Finance System Needs Overahaul ASAP
From the IMF..."As emphasized in the conclusions of the recent Financial Sector Assessment Program, an overhaul is needed of the U.S. housing finance system, including the role of the mortgage-related, government-sponsored enterprises. These could be either privatized or converted to public utilities with an explicit (and explicitly funded) guarantee. The authorities should not delay efforts to create an action plan for the future."
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard .
Brett Boyke  :  "us bank reprice"
Matthew Graham  :  "FYI, highs and lows in 10yr yields from 1pm on 1/20 form a perfectly aligned trend channel lower in yield which was tested in the initial selling. It would take mid 3.41's to break it."
Brett Boyke  :  "chase repricing"
Thomas Quann  :  "AQ- that is a funny way of putting it..... Range exhaustion. I know, i keep telling myself "Rangebound".... but the only thing i am bound for is a mental institution."
Adam Quinones  :  "TQ has range exhaustion"
Thomas Quann  :  "I feel like we just cant catch a break. When ever we do, the door gets slammed in our face."
Victor Burek  :  "flagstar about .125 worse than yesterday"
Steven Stone  :  "- Echoing a sharper than expected decline seen in the S&P/Case-Shiller numbers earlier this morning, the November FHFA House Price Index saw its year-on-year comparison drop from -3.4% to -4.3%. More to come.... "
Adam Quinones  :  "it is encouraging to see 10s hold the mid-range pivot even after the outlier"
Adam Quinones  :  "On Consumer Confidence, the range of economist estimates surveyed by Reuters was 57.0 to 52.0 "
Adam Quinones  :  "Note the 10yr note yield chart below. 10s are currently testing a long-term 50% fibonacci retracement. The market's first attempt to break that technical resistance level has failed. If we had to guess, barring an outlier Consumer Confidence read at 10am...we'd say benchmark 10s are likely to bounce back and forth between 3.35% and 3.40% for the rest of the day. If we had to pick a close, we'd be more biased toward short covering and close near 3.35% today."
Adam Quinones  :  "yes I think we'll find support Mike"
Mike Drews  :  "it would be nice to see some strong resistance at 3.39 here"
Adam Quinones  :  "Plain and Simple: This isn't the case in every city but in general, home prices are still being pressured lower by excessive amounts of excess inventory and a generally apathetic attitude. Buyers are more than willing to wait and see if prices fall further. When people ask me if I would buy a home right now, I say yes but I only a house that doesn't have a close substitute....not a townhouse or a condo. "
Adam Quinones  :  "doubtful Owl. Maybe a few lines on fiscal responsibility but I wouldnt expect to see Obama shoot himself in the foot"
Chris Kopec  :  "I keep hearing pundits predicting the SOTU will be pounding on cutting deficits."
Adam Quinones  :  "gotta see that duration drift in our favor."
Adam Quinones  :  "all tactical....strategic considerations dont come back into play until real$ moves down in coupon"
Steven Stone  :  "id be selling at 3.20"
Adam Quinones  :  "...and would be quick to book a profit if rates continued to fall. Which is why we keep saying the move lower will take much longer than spike higher."
Adam Quinones  :  "traders would be quick to book a profit through 3.20% though"
Adam Quinones  :  "but that bear flag makes me awfully nervous"
Adam Quinones  :  "my gut says the same thing Mike"
John Rodgers  :  "The LO's on this chat need to realize that you have better information then you competition does. Adam and Matt are awesome at what they do but no analyst can forecast the market. The analysis and news they provide should GUIDE you when making decisions about the market which should help you make more money. Ultimately its YOUR pay check."
Mike Drews  :  "I have a strange feeling about the 10Yr getting down to about 3.2 within the next week."
Adam Quinones  :  "tactical vs. strategic...dont play tactical move unless youve got the right execution platform and the money to lose"
Steven Stone  :  "i think the stock market is set up for a big correction"
Adam Quinones  :  "having a hard time breaking through..."
Adam Quinones  :  "10s just hit a retracement line at 3.35%"