MBS Live: MBS Morning Market Summary
We don't say the following in an attempt to be funny, but markets are flat again. It feels like we continue to be victimized by the same joke. It's somewhat understandable from an MBS perspective as we're in the midst of monthly settlements for Fannie and Freddie 30yr's, but what is Treasuries' excuse? The truth is that they're not quite as flat as they appear to be, simply that most of the change came during the overnight session with yields holding between 1.88 and 1.91 in the domestic session.
Looked at from a horizontal perspective, this is sort of an indecisive zone for 10's. They've shown a propensity to treat either 1.90 or 1.88 as resistance or support at different times. The behavior is consistent with past examples where pivot points haven't haven't been perfectly discrete levels, but rather have consisted of a small range of yields forming a thicker line in the sand. Basically, take one discrete yield level in 10's, 1.8897 for instance and draw over that line with a thicker marker and there's your pivot point.
But there's more evidence for a TRENDING market in 10yr yields than for the horizontal view, even though the latter will always be considered. In this sense, we've been trending ever since April's NFP, with a brief test higher during 4/25's FOMC events and a test lower over the past few days, and now today's trading merely brings us back in line with the trend, suggesting we keep an eye on top side support around 1.94+ (bust descending from there).
Looked at from a horizontal perspective, this is sort of an indecisive zone for 10's. They've shown a propensity to treat either 1.90 or 1.88 as resistance or support at different times. The behavior is consistent with past examples where pivot points haven't haven't been perfectly discrete levels, but rather have consisted of a small range of yields forming a thicker line in the sand. Basically, take one discrete yield level in 10's, 1.8897 for instance and draw over that line with a thicker marker and there's your pivot point.
But there's more evidence for a TRENDING market in 10yr yields than for the horizontal view, even though the latter will always be considered. In this sense, we've been trending ever since April's NFP, with a brief test higher during 4/25's FOMC events and a test lower over the past few days, and now today's trading merely brings us back in line with the trend, suggesting we keep an eye on top side support around 1.94+ (bust descending from there).
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.
10:00AM :
Freddie Mac: Second Consecutive Week of Record-Low Fixed Mortgage Rates
30-year fixed-rate mortgage (FRM) averaged 3.83 percent with an average 0.7 point for the week
ending May 10, 2012, down from last week when it averaged 3.84 percent. Last year at this time, the
30-year FRM averaged 4.63 percent.
15-year FRM this week averaged 3.05 percent with an average 0.7 point, down from last week when it averaged 3.07 percent. A year ago at this time, the 15-year FRM averaged 3.82 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.81 percent this week, with an average 0.5 point, down from last week when it averaged 2.85 percent. A year ago, the 5-year ARM averaged 3.41 percent.
1-year Treasury-indexed ARM averaged 2.73 percent this week with an average 0.5 point, up from last week when it averaged 2.70 percent. At this time last year, the 1-year ARM averaged 3.11 percent.
15-year FRM this week averaged 3.05 percent with an average 0.7 point, down from last week when it averaged 3.07 percent. A year ago at this time, the 15-year FRM averaged 3.82 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.81 percent this week, with an average 0.5 point, down from last week when it averaged 2.85 percent. A year ago, the 5-year ARM averaged 3.41 percent.
1-year Treasury-indexed ARM averaged 2.73 percent this week with an average 0.5 point, up from last week when it averaged 2.70 percent. At this time last year, the 1-year ARM averaged 3.11 percent.
9:23AM :
ALERT ISSUED:
Treasuries Much Weaker Overnight, MBS Outperform
Coming in this morning to 10yr yields over 1.88%, we expected to see some clear "cause and effect" in the overnight session, but it was, in fact, surprisingly quiet given the 6-7 bps movement from yesterday's last trade. With no major sources of inspiration overnight, bond markets drifted weaker in what now looks like more of a technical correction--that is to say, 10yr yields essentially returned to their previous bullish trend from April to early May and are now pausing to consider whether or not they have crossed the "pivot zone" between 1.90-1.88. With yields currently at 1.9016, it's hard to say for sure, but if they're under 1.95% by the end of the day, the bullish trend would remain intact.
MBS, by comparison, are doing much better. This is very much as-expected considering the recent, massive underperformance as MBS prices ran out of room to rally further while Treasuries benefited from European "risk-off" spillover. So instead of this being something new and bullish, we're just seeing some level of correction to previous spread fluctuations. None of this has much of an implication on pricing beyond the fact that Fannie 3.5's are merely 3-4 ticks lower this morning.
The 8:30am data reaction was even more muted than we'd been expecting. So we remain on guard for European news as the key market mover. In addition, Bernanke speaks in about 10 minutes and 1pm sees the last of the week's coupon auctions with 30yr Bonds.
MBS, by comparison, are doing much better. This is very much as-expected considering the recent, massive underperformance as MBS prices ran out of room to rally further while Treasuries benefited from European "risk-off" spillover. So instead of this being something new and bullish, we're just seeing some level of correction to previous spread fluctuations. None of this has much of an implication on pricing beyond the fact that Fannie 3.5's are merely 3-4 ticks lower this morning.
The 8:30am data reaction was even more muted than we'd been expecting. So we remain on guard for European news as the key market mover. In addition, Bernanke speaks in about 10 minutes and 1pm sees the last of the week's coupon auctions with 30yr Bonds.
8:47AM :
ECON: Import Prices See Biggest Drop Since June 2011, Led By Oil
* Import Prices -0.5 pct vs -0.2 pct consensus
* Biggest drop since June 2011
* Export Prices +0.4 pct vs +0.2 pct consensus
* Petroleum import prices -1.8 pct vs March +4.9 pct
U.S. import prices declined 0.5 percent in April, the U.S. Bureau of Labor Statistics reported today, following a 1.5 percent increase in March. The April decrease was driven by lower fuel prices which more than offset a small increase in nonfuel prices. The price index for overall exports rose 0.4 percent in April after a 0.8 percent increase the previous month.
* Biggest drop since June 2011
* Export Prices +0.4 pct vs +0.2 pct consensus
* Petroleum import prices -1.8 pct vs March +4.9 pct
U.S. import prices declined 0.5 percent in April, the U.S. Bureau of Labor Statistics reported today, following a 1.5 percent increase in March. The April decrease was driven by lower fuel prices which more than offset a small increase in nonfuel prices. The price index for overall exports rose 0.4 percent in April after a 0.8 percent increase the previous month.
8:43AM :
ECON: Trade Deficit Widens to $51.83 bln. Record High Imports/Exports
*Trade Deficit $51.83 bln vs $50.0 bln expectation
*Exports rise most since July 2011 +2.9 pct
*imports rise most since Jan 2011 +5.2 pct
*Import/export totals hit record highs
*Oil import price $107.95/bbl vs $103.63/bbl Feb
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total March exports of $186.8 billion and imports of $238.6 billion resulted in a goods and services deficit of $51.8 billion, up from $45.4 billion in February, revised. March exports were $5.3 billion more than February exports of $181.5 billion. March imports were $11.7 billion more than February imports of $226.9 billion.
In March, the goods deficit increased $6.5 billion from February to $67.6 billion, and the services surplus increased $0.1 billion from February to $15.8 billion. Exports of goods increased $4.7 billion to $132.7 billion, and imports of goods increased $11.3 billion to $200.3 billion. Exports of services increased $0.5 billion to $54.1 billion, and imports of services increased $0.4 billion to $38.3 billion.
The goods and services deficit increased $5.8 billion from March 2011 to March 2012. Exports were up $12.8 billion, or 7.3 percent, and imports were up $18.5 billion, or 8.4 percent.
*Exports rise most since July 2011 +2.9 pct
*imports rise most since Jan 2011 +5.2 pct
*Import/export totals hit record highs
*Oil import price $107.95/bbl vs $103.63/bbl Feb
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total March exports of $186.8 billion and imports of $238.6 billion resulted in a goods and services deficit of $51.8 billion, up from $45.4 billion in February, revised. March exports were $5.3 billion more than February exports of $181.5 billion. March imports were $11.7 billion more than February imports of $226.9 billion.
In March, the goods deficit increased $6.5 billion from February to $67.6 billion, and the services surplus increased $0.1 billion from February to $15.8 billion. Exports of goods increased $4.7 billion to $132.7 billion, and imports of goods increased $11.3 billion to $200.3 billion. Exports of services increased $0.5 billion to $54.1 billion, and imports of services increased $0.4 billion to $38.3 billion.
The goods and services deficit increased $5.8 billion from March 2011 to March 2012. Exports were up $12.8 billion, or 7.3 percent, and imports were up $18.5 billion, or 8.4 percent.
8:36AM :
ECON: Claims "Fall" Higher to 367k
*Claims "fell" to 367k vs 369 k consensus
* previous week revised higher from 365k to 368k * Continued claims fell to 3.229, lowest since July 2008
In the week ending May 5, the advance figure for seasonally adjusted initial claims was 367,000, a decrease of 1,000 from the previous week's revised figure of 368,000. The 4-week moving average was 379,000, a decrease of 5,250 from the previous week's revised average of 384,250.
The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending April 28, a decrease of 0.1 percentage point from the prior week's unrevised rate of 2.6 percent.
The advance number for seasonally adjusted insured unemployment during the week ending April 28 was 3,229,000, a decrease of 61,000 from the preceding week's revised level of 3,290,000. The 4-week moving average was 3,290,000, a decrease of 10,500 from the preceding week's revised average of 3,300,500.
* previous week revised higher from 365k to 368k * Continued claims fell to 3.229, lowest since July 2008
In the week ending May 5, the advance figure for seasonally adjusted initial claims was 367,000, a decrease of 1,000 from the previous week's revised figure of 368,000. The 4-week moving average was 379,000, a decrease of 5,250 from the previous week's revised average of 384,250.
The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending April 28, a decrease of 0.1 percentage point from the prior week's unrevised rate of 2.6 percent.
The advance number for seasonally adjusted insured unemployment during the week ending April 28 was 3,229,000, a decrease of 61,000 from the preceding week's revised level of 3,290,000. The 4-week moving average was 3,290,000, a decrease of 10,500 from the preceding week's revised average of 3,300,500.
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.
Matthew Graham : "shocker"
Matthew Graham : "RTRS - BERNANKE SAYS TIGHT LENDING STANDARDS FOR HOME MORTGAGE LENDING MAY BE PREVENTING LOANS TO MANY CREDITWORTHY BORROWERS "
Matthew Graham : "combine that with the prevailing sense that the Fed will "act as needed," this could be taken as a hint that this is where the Fed sees itself as being needed (even if it's merely to have another sit down, hands-on-shoulders "lunch" with congress)."
Matthew Graham : "RTRS - BERNANKE SAYS WHILE CREDIT AVAILABILITY GENERALLY IMPROVING, CONDITIONS IN SOME AREAS LIKE MORTGAGE LENDING STILL TIGHT AND WON'T TURN AROUND QUICKLY "
Matthew Graham : "RTRS - BERNANKE-SLOW RECOVERY OF ECONOMY AND HOUSING MARKETS, UNCERTAINTY ABOUT GSES' FUTURE, LENDER CAUTION CONSTRAINING HOME MORTAGE LENDING "
Matthew Graham : "Bernanke bullets are out, but not much that hasn't been heard before. Still, if you were determined to read between the lines some sort of tacit commitment to addressing the mortgage/housing market, you might be able to make a case for it."
B-C : "oh i see. "
Adam Quinones : "it's really down ~9/32"
Adam Quinones : "new coupon"
B-C : "WOW the 10yr is down 2.29?"
Jason Zimmer : "lets' pay MI with 20% down"
B-C : "FHA will do it"
Brent Borcherding : "NOOC can provide all in that scenario."
Victor Burek : "they are doing 20% down"
Jason Zimmer : "if 20% i think all can come from noo"
Jason Zimmer : "OOC has to contribute at least 3% on some deals and 5% on others"
Victor Burek : "when doing a freddie mac purchase loan with a non occ. co signor...can all the down payment come from teh co signor or does the occupant have to provide some of the down payment?"
Matthew Graham : "Granted none of this morning's data is that inspiring, but the reaction is even more sideways and muted than I would have thought."
Matthew Graham : "RTRS - U.S. APRIL YEAR-OVER-YEAR IMPORT PRICES +0.5 PCT, WEAKEST READING SINCE OCT 2009; EXPORT PRICES +0.7 PCT, SMALLEST GAIN SINCE NOV 2009 "
Matthew Graham : "RTRS- U.S. APRIL PETROLEUM IMPORT PRICES -1.8 PCT VS MARCH +4.9 PCT "
Matthew Graham : "RTRS - U.S. APRIL EXPORT PRICES +0.4 PCT (CONSENSUS +0.2 PCT) VS MARCH +0.8 PCT (PREV +0.8 PCT) "
Matthew Graham : "RTRS- U.S. APRIL IMPORT PRICES -0.5 PCT, BIGGEST DROP SINCE JUNE 2011, (CONS. -0.2 PCT) VS MARCH +1.5 PCT (PREV +1.3 PCT) "
Matthew Graham : "RTRS - US MARCH EXPORTS RECORD HIGH $186.77 BLN VS FEB $181.49 BLN, MARCH IMPORTS RECORD HIGH $238.60 BLN VS FEB $226.91 BLN "
Victor Burek : "not like it has happened every week this year"
Matthew Graham : "RTRS - US MARCH EXPORTS +2.9 PCT, LARGEST RISE SINCE JULY 2011, VS FEB +0.3 PCT; IMPORTS +5.2 PCT, LARGEST RISE SINCE JAN 2011, VS FEB -2.8 PCT "
Ira Selwin : "Havent seen that before"
Matthew Graham : "RTRS - US MARCH TRADE DEFICIT $51.83 BLN (CONSENSUS $50.00 BLN) VS FEB DEFICIT $45.42 BLN (PREV $46.03 BLN) "
Ira Selwin : "VB - seems like a rarity"
Matthew Graham : "RTRS - US CONTINUED CLAIMS FELL TO 3.229 MLN APRIL 28 WEEK, LOWEST SINCE JULY 2008, (CONS. 3.278 MLN) FROM 3.290 MLN PRIOR WEEK (PREV 3.276 MLN) "
Victor Burek : "last weeks revised just high enough to say claims fell"
Matthew Graham : "RTRS- US JOBLESS CLAIMS FELL TO 367,000 MAY 5 WEEK (CONSENSUS 369,000) FROM 368,000 PRIOR WEEK (PREVIOUS 365,000) "
B-C : "thanks"
Ira Selwin : "Yesterday was a 10 year auction"
Ira Selwin : "typically when you see a spike like that it is due to a previous day auction BC"
B-C : "why the 10yr spike?"
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