MBS Live: MBS Morning Market Summary
Much like yesterday, MBS opened in line with the lows from the previous afternoon (yesteray's "previous afternoon" would be Friday, of course). Also similar are the moderate gains into the 10am hour and "second thoughts" about those gains shortly thereafter. While the losses aren't quite as steep as yesterday's, we started out a bit weaker by comparison, and have stayed in a narrower range despite the return of the UK and Japan to overnight trading (on holiday yesterday) and more economic data at home and abroad (albeit bottom shelf data at home, which included JOLTS and the IBD Optimism Survey). Perhaps most importantly, what has been a 4 day downtrend in prices from Thursday has put in lows that are right in line with the previous session's for the first time (103-29 today and yesterday in Fannie 3.0s). We'll be watching these lows carefully. If they hold, it's the first sign of a bottoming-out for the recent selling trend. The same can't be said for Treasuries, however, where 10's ratcheted noticeably higher than yesterday afternoon's high yields. It's possible that we could build on this morning's 1.79 level as a supportive ceiling, but regardless, will watch it in the same way we'd watch 103-29: If it holds, chalk one up for the good guys. The 3yr Auction is coming up at 1pm, but isn't a market mover. Consumer Credit is out at 3pm and can have a slight impact on equities from time to time. If that's the case and if the stock lever is providing cues for bored bond markets, it might have a microscopic effect.
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.
9:06AM :
Treasuries Extend Weakness From EU Session, MBS Follow
With Japan and the UK back in the office after yesterday's holiday absences, overnight volume was healthier. The Asian hours were moderately constructive for Treasuries, with yields dropping as low as 1.747. Incidentally, there were numerous bounces there, just as there were yesterday morning, but on the other side, with 1.747 acting as a ceiling. This stair-stepping movement is one potential indication that a trend higher is forming.
Another indication would be the presence of 'higher highs,' which we've just seen in early domestic trading as 10's hit 1.785 vs yesterday's 1.776. This comes after a steady grind from overnight lows that started during European hours. Stronger German Industrial Orders were the only standout data, but peripheral spreads tightened (meaning that the more at-risk countries' yields moved lower in relation to Germany's, which tends to coincide with rising German Bund yields and rising US TSY yields).
There was enough weakness in place by 8am for MBS to open up a few ticks in the red with Fannie 3.0s down 2 ticks to 103-31. They've since shed another tick as bond markets in general have weakened in the first hour. S&P futures mostly followed (or led) TSY yields overnight, and though th correlation is breaking down a bit in the past half hour, are still indicating an open in new all-time high territory by just a few points.
Another indication would be the presence of 'higher highs,' which we've just seen in early domestic trading as 10's hit 1.785 vs yesterday's 1.776. This comes after a steady grind from overnight lows that started during European hours. Stronger German Industrial Orders were the only standout data, but peripheral spreads tightened (meaning that the more at-risk countries' yields moved lower in relation to Germany's, which tends to coincide with rising German Bund yields and rising US TSY yields).
There was enough weakness in place by 8am for MBS to open up a few ticks in the red with Fannie 3.0s down 2 ticks to 103-31. They've since shed another tick as bond markets in general have weakened in the first hour. S&P futures mostly followed (or led) TSY yields overnight, and though th correlation is breaking down a bit in the past half hour, are still indicating an open in new all-time high territory by just a few points.
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 York : "Paul, use this to figure out what you can and can't do on a VA loan over the county max: http://www.benefits.va.gov/homeloans/documents/docs/guaranty_calculation_examples.pdf"
Matt Hodges : "$460K price = $417 eligibility, $43,000 remaining x 25% = $10,750 required down payment"
Matt Hodges : "yes"
Paul Mignone : "Does anyone know if there is a VA jumbo out there which goes above county max? "
Brett Boyke : "Seems eerily familiar"
Ken Crute : "lock your fence sitters, submit, reload, carry on "
Ken Crute : "we have to some red days to make us appreciate the green days "
Matthew Graham : "yeah, the overnight yield lows rest perfectly on yesterday's AM yield highs--just the kind of 'bad ratcheting' behavior that connotes a directional trend."
Brett Boyke : "Good idea JA. 10 yr was at 1.74 late last night, looks like we will leak back into the 1.80's"
Jeff Anderson : "GM, all. I'm not talking to you 103. I'm waiting for my friend, 104, to come back."
Jason Anker : "Sung - I just had to do a credit sup for one to show 0 bal. make sure not incl. in a BK"
Chip Harris : "Sung, 3 years
2 years with extenuating circumstance (job loss doesn't count)
"
Mike Drews : "3"
Sung Kim : "gm - anyone on that knows how many years out of FC for FHA?"
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