MBS Live: MBS Morning Market Summary
MBS, Treasuries, and Stocks have all traded in eerily similar patterns to yesterday through the same time. This is characterized by an overnight session that starts sideways for Treasury yields and equities futures, with both moving up in European hours, dipping lower into the 10am hour, leveling off, and rising into the close. Viewed from an MBS standpoint, both today and yesterday started with prices down several ticks and in both instances, rallying to +2-3 ticks improvement by 10am, then slipping from there. If the pattern holds, we're getting ready to head lower, but perhaps a better way to look at it would be to simply stay on guard against headwinds. These sorts of fractal relationships between various pockets of time on the charts is more of an interesting way to examine what's already happened as opposed to predict what will happen going forward. To that end, technical support in the mid 1.73's (10yr yields) seems important. A break higher likely results on incremental pressure on MBS. This afternoon's 3yr Auction isn't likely to be a big market mover, but the general unimportance of 2-3 year auctions will start shifting some time this year or next. Naturally, it will happen with 3's first (because markets care less and less about a Treasury security the shorter its duration--i.e. more like "cash" the lower the maturity). As such, we'll be tuned in at 1pm, but not expecting anything massive by way of reaction.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
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Morning Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts and updates issued via email and text alert to MBS Live subscribers this morning.
10:12AM :
ECON: Wholesale Sales Increase, Inventories Fall Most in 1.5 yrs
- Inventories -0.3 vs +0.5 Consensus
- Sales +1.7 vs +1.3 Consensus
- Biggest decline for inventories since Sept 2011
- Stock/Sales ratio at 1.19 vs 1.21 previously
- Market Reaction: Equities up slightly and perhaps a very small amount of pressure on bond markets.
The U.S. Census Bureau announced today that February 2013 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $422.5 billion, up 1.7 percent (+/-0.5%) from the revised January level and were up 3.7 percent (+/-1.1%) from the February 2012 level. The January preliminary estimate was revised upward $0.1 billion. February sales of durable goods were up 0.4 percent (+/-0.7%)* from last month and were up 2.0 percent (+/-1.6%) from a year ago. Sales of computer and computer peripheral equipment and software were up 2.3 percent from last month, while sales of electrical and electronic goods were down 2.3 percent. Sales of nondurable goods were up 2.7 percent (+/-0.9%) from January and were up 5.1 percent (+/-1.4%) from last February. Sales of petroleum and petroleum products were up 10.6 percent from last month.
Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $501.4 billion at the end of February, down 0.3 percent (+/-0.2%) from the revised January level, but were up 4.7 percent (+/-1.1%) from the February 2012 level. The January preliminary estimate was revised downward $1.7 billion or 0.3 percent. February inventories of durable goods were up 0.2 percent (+/-0.4%)* from last month and were up 7.5 percent (+/-1.4%) from a year ago. Inventories of computer and computer peripheral equipment and software were up 2.2 percent from last month. Inventories of nondurable goods were down 0.9 percent (+/-0.4%) from January, but were up 0.7 percent (+/-1.4%)* from last February. Inventories of farm product raw materials were down 5.7 percent from last month and inventories of drugs and druggists' sundries were down 3.0 percent.
The February inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.19. The February 2012 ratio was 1.18.
- Sales +1.7 vs +1.3 Consensus
- Biggest decline for inventories since Sept 2011
- Stock/Sales ratio at 1.19 vs 1.21 previously
- Market Reaction: Equities up slightly and perhaps a very small amount of pressure on bond markets.
The U.S. Census Bureau announced today that February 2013 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $422.5 billion, up 1.7 percent (+/-0.5%) from the revised January level and were up 3.7 percent (+/-1.1%) from the February 2012 level. The January preliminary estimate was revised upward $0.1 billion. February sales of durable goods were up 0.4 percent (+/-0.7%)* from last month and were up 2.0 percent (+/-1.6%) from a year ago. Sales of computer and computer peripheral equipment and software were up 2.3 percent from last month, while sales of electrical and electronic goods were down 2.3 percent. Sales of nondurable goods were up 2.7 percent (+/-0.9%) from January and were up 5.1 percent (+/-1.4%) from last February. Sales of petroleum and petroleum products were up 10.6 percent from last month.
Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $501.4 billion at the end of February, down 0.3 percent (+/-0.2%) from the revised January level, but were up 4.7 percent (+/-1.1%) from the February 2012 level. The January preliminary estimate was revised downward $1.7 billion or 0.3 percent. February inventories of durable goods were up 0.2 percent (+/-0.4%)* from last month and were up 7.5 percent (+/-1.4%) from a year ago. Inventories of computer and computer peripheral equipment and software were up 2.2 percent from last month. Inventories of nondurable goods were down 0.9 percent (+/-0.4%) from January, but were up 0.7 percent (+/-1.4%)* from last February. Inventories of farm product raw materials were down 5.7 percent from last month and inventories of drugs and druggists' sundries were down 3.0 percent.
The February inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.19. The February 2012 ratio was 1.18.
9:20AM :
MBS, Treasuries Back To Green After Opening Slightly Weaker
It was another cookie cutter overnight session with Treasuries moving sideways-to-slightly-stronger in Asian hours and then weakening markedly with the onset of European trading. European data was mixed, but equities built on Monday's US equities rally and bond markets were under pressure from current and impending supply considerations.
There hasn't been any significant economic data in the US this morning, but Fed's Bullard made an appearance on CNBC saying that the latest NFP results don't change his outlook, and there's not enough evidence to declare 2013 another "spring swoon" owing in part to a calmer situation in Europe. He added that an unemployment rates in the 7's definitely counts as "substantial" improvement, but that the Fed still has room to maneuver.
This didn't trip markets up in any meaningful way as 10's continued to head back under 1.74% from 1.764% highs just before the open. At 1.7348, they're now close to overnight lows of 1.731. MBS began the session down 2 ticks at 104-00 in Fannie 3.0s, but are now 3 ticks higher vs yesterday at 104-05. Wholesale Inventories is the only official report of the morning (not counting the the JOLTS survey which isn't a short term market mover), coming up at 10am. The auction cycle kicks off this afternoon with 3yr Notes at 1pm.
There hasn't been any significant economic data in the US this morning, but Fed's Bullard made an appearance on CNBC saying that the latest NFP results don't change his outlook, and there's not enough evidence to declare 2013 another "spring swoon" owing in part to a calmer situation in Europe. He added that an unemployment rates in the 7's definitely counts as "substantial" improvement, but that the Fed still has room to maneuver.
This didn't trip markets up in any meaningful way as 10's continued to head back under 1.74% from 1.764% highs just before the open. At 1.7348, they're now close to overnight lows of 1.731. MBS began the session down 2 ticks at 104-00 in Fannie 3.0s, but are now 3 ticks higher vs yesterday at 104-05. Wholesale Inventories is the only official report of the morning (not counting the the JOLTS survey which isn't a short term market mover), coming up at 10am. The auction cycle kicks off this afternoon with 3yr Notes at 1pm.
Live Chat Featured Comments
A recap of the featured comments from the MBS Live Dashboard's Live Chat feature, utilized by hundreds of industry professionals each day.
Jason Anker : "lack of choice would have a negative impact on houseing... and someone wrote student laons were bad for houseing, try killing the 30 fixed"
Gus Floropoulos : "its the warm fuzzy feeling of no surprises for 30 years....little do they realize that statistically they r not keeping that loan for 30 and therefore not really paying whatever % they thought was soooo great for 30 "
Brent Borcherding : "It'd change very easily if there wasn't a choice."
Jason Anker : "but we all know how easy it is to sell a new idea to our target audience... We're a 30 fixed country for better or worse and no one can change that"
Victor Burek : "way too much bad press about ARMS"
Gus Floropoulos : "yea, no one listens to my advice about 10/1 I/O's being the best deal...."
Matt Hodges : "try selling ARMs and you get your head bitten off by the Realtor though"
Gus Floropoulos : "30 year loans are a scam though...statistics show loans get satisfied within 7 years, 30 yr amorts. have heavy interest during the first 10 years, its a win win for banks....if u take a 30 year loan @ 5%, and refi year 7 u werent paying 5%, u were paying more like 8%"
Jason Anker : "in general - you wont be able to recondition the entire country to accept non-fixed rate/payment loans and second - if run prperty the govies will turn a profit not a loss"
Brent Borcherding : "If you look over the last 30 years it is quite obvious that noone should've had a 30 year mortgage, but it's getting harder to say that moving forward."
Jason Anker : "am I late to the party or have we not yet talked about the Bloomberg atricle - Kill the 30 year mortgage?"
Gus Floropoulos : "very informative article MG, thanks"
Andrew Horowitz : "taking out of context, he was discussing when their economy was expanding "
Victor Burek : "but to use Europe as an example was pretty poor, saying they never got to 6.5%"
Andrew Horowitz : "he is correct the economy can improve with U/E in the mid 7's, not saying it will be a robust economy but it can improve"
Ken Crute : "sounds like he is saying we don't need to, for economy to improve "
Victor Burek : "so is he saying we might never get back to 6.5% unemployment?"
Ken Crute : "most of his comments seem politically motivated "
Matthew Carver : "is it the "never lock on the second tuesday of the month" rule?"
Michael Kelleher : "this st. louis fed guy seems liek a real know it all"
Brayden Alexander : "Is it the 104 floor?"
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