MBS Pricing Snapshot

Bond markets managed to hold their ground against earlier "risk-on" move around 1:15pm following a technical bounce in the EUR/USD (1.3072). As soon as Euros topped out at 1.3090, so did Treasury yields though equities continued to advance until about 2:30pm. MBS experienced all of the above drama merely as a move down to 103-14 from 103-18 highs.

When stocks finally turned the corner, bond markets improved further, with 10yr yields making modest run lower into the 3pm official close. Given that today is month end, that time frame saw an understandably higher level of activity leading up to the 3pm cut off. Equities have continued to fall since then, and again ratcheted lower after the cash close for stocks.

All things considered, bond markets haven't done much to follow equities compared to their normal stance. 10's have resisted a break below 1.88 and MBS are still capped by their 103-18 high in Fannie 3.0s. Even so, being at the highs of the day, with stable pricing in the rear-view is a net-positive for MBS, and reprice risk is tilted positively if it has any sort of tilt. Keep in mind that month-end pricing strategies can vary.

There's not necessarily an increase in negative reprice risk at the moment, but we wanted to let you know that Treasuries and Equities have taken off a bit, with respect to the sideways grinds that dominated mid-morning trading. This isn't a huge move, with 10's only going from 1.89 to .190 over 10 minutes, but it was fairly abrupt and pulled MBS off the highs of their super tight range.

Fannie 3.0s are down from their 103-18 highs to their 103-15 lows currently, and at this point, we'd be more interested in paying attention to incoming prices as related markets seem to be stirring. Bottom line, sleepy day so far, but may be time to wake up and look outside. Not stormy yet, but some of the clouds look like they're at least thinking about it.

Highlights:
- Originations rise to $553 billion
- 210k new foreclosure notations, a 13.3% decrease
- Delinquency rate down to 5.6% from 5.9%
- HELOC delinquency drops attributed to charge-offs

Aggregate consumer debt increased slightly in the fourth quarter, by $31 billion, a reversal from the downward trend that has been in place since the fourth quarter of 2008. As of December 31, 2012, total consumer indebtedness was $11.34 trillion, 0.3% higher than its level in the third quarter of 2012. Overall consumer debt remains considerably below its peak of $12.68 trillion in 2008Q3.