MBS Live: MBS Morning Market Summary
It's a bit counterintuitive to think that MBS hitting all-time highs can occur in an "uneventful" fashion, but that has been the case for two days in a row now. After Friday produced some of the lightest volume that we've ever seen on an NFP day, "risk" (i.e. stock prices, bond yields, euro currency, etc.) has taken on the role of plane that just lost both engines: it's still up in the air, looks like it's losing altitude, and there's a concern it could crash less-than gracefully. Volume has been low and improvements in bond markets have been very small and incremental--just barely enough to claim breaks of all-time highs both yesterday and today for production MBS.
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.
9:51AM :
ALERT ISSUED:
MBS Fighting To Stay In Positive Territory As Stock Lever Drags TSYs Higher
It's been another choppy morning for bond markets as pathetically low volume magnifies the trading preferences of those who are actually participating in any sort of size. But it's important to note that what looks like volatility in the short term is greatly exaggerated by the narrow range of prices and yields over the past two days. Zoom out to a 1-month time frame and suddenly, this week's trading looks downright flat!
We can't emphasize enough how very limited things have been in terms of data and/or events. There's precious little trading guidance available from the usual suspects, and the usual suspects that remain (such as headlines from various EU Leaders) have been almost exclusively 'as-expected.'
10yr yields cut roughly at 3bp range overnight and touched both those extremes between 7:30 and 8:30am, moving from 1.534 to 1.514. MBS opened up just slightly weaker than yesterday's closing levels, but soon regained them as bond markets generally firmed up into the opening hour.
The onset of domestic cash trading in stock markets has put a small amount of pressure on bond markets. Stocks have since backed off from their opening rally and 10yr yields are now mid-range at 1.5252. MBS are fighting to retain their "in the green" status with Fannie 3.0's currently maintaining that title by 1 tick at 103-17. Fannie 3.5s are also 1 tick better day-over-day at 105-29. Keep in mind that prices will seemingly drop tonight as July coupons (in Fannie/Freddie 30yr MBS) are retired and markets switch to follow August coupons as the new "front month."
There are no major market movers on tap for the balance of the day, though it's conceivable the 3yr auction cause a small amount of movement. In general though, MBS and the long end of the yield curve haven't been much concerned with any Treasury issuance under 5yrs for almost a year now. It would have to come in very far from consensus in order to move things much.
We can't emphasize enough how very limited things have been in terms of data and/or events. There's precious little trading guidance available from the usual suspects, and the usual suspects that remain (such as headlines from various EU Leaders) have been almost exclusively 'as-expected.'
10yr yields cut roughly at 3bp range overnight and touched both those extremes between 7:30 and 8:30am, moving from 1.534 to 1.514. MBS opened up just slightly weaker than yesterday's closing levels, but soon regained them as bond markets generally firmed up into the opening hour.
The onset of domestic cash trading in stock markets has put a small amount of pressure on bond markets. Stocks have since backed off from their opening rally and 10yr yields are now mid-range at 1.5252. MBS are fighting to retain their "in the green" status with Fannie 3.0's currently maintaining that title by 1 tick at 103-17. Fannie 3.5s are also 1 tick better day-over-day at 105-29. Keep in mind that prices will seemingly drop tonight as July coupons (in Fannie/Freddie 30yr MBS) are retired and markets switch to follow August coupons as the new "front month."
There are no major market movers on tap for the balance of the day, though it's conceivable the 3yr auction cause a small amount of movement. In general though, MBS and the long end of the yield curve haven't been much concerned with any Treasury issuance under 5yrs for almost a year now. It would have to come in very far from consensus in order to move things much.
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.
Ted Rood : "Know 5/3 was doing them retail here in StL, LO's making a mint, but not sure about wholesale."
Jason York : "KC mentioned 5th 3rd, but I haven't verified"
Brent Borcherding : "I believe someone mentioned the other day their was a wholesale lender who is funding IRRRLs, no appraisal or AVM, with different servicer...anyone know who might be doing these?"
Matt Hodges : ".125% rate"
Gaius Rossini : "generally, what's the spread between the 30 year rate and the 20 year rate?"
Matt Hodges : "i don't know, BK, but Ira posted this yesterday as a ref: https://www.efanniemae.com/sf/mha/mharefi/pdf/refinancefaqs.pdf"
Bobby Kurpinsky : "anyone out there know if Harp 2 allows for Condotels?"
BT Denton : "Stock lever fading."
Matt Hodges : "really, the only way this isn't loan fraud on their part is if they were relocated by their company. Realizing that "the commute was too long" doesn't fly. "
Jason York : "that is what I thought too MH, they are opening up themselves for a possible investigation, but as you said, unlikely"
Matt Hodges : "the f/f note clearly states their intention to live in for 12 months. the client is theoretically subject to having the loan called, though unlikely"
Victor Burek : "or possibly as a second home"
Victor Burek : "i say only way to get it done is as an investment"
Jason York : "my thoughts as well, but I told them I can't say it is impossible, but to just call the broker and quiz them about everything"
Brent Borcherding : "Doubtful JY."
Jason York : "yeah, my UW's said 12 months, which makes sense to me, but another broker is telling them he can do it, and issued a pre-approval letter for them, the Realtor sends me a ton of business, so she called me to get my thoughts on it, as she was concerned about wasting her time showing them another house"
Matthew Graham : "I don't know the letter of the reg on that, but I'm guessing they're going to need a pretty damn good LOE if it's doable JY"
Jason York : "if a customer bought a primary residence 2 months ago, then realized the commute was too much, and wants to buy another primary residence, they have to wait 12 months, correct?"
Matthew Graham : "RTRS - EU'S REHN -DIRECT ESM BANK RECAPITALISATIONS WILL NOT REQUIRE SOVEREIGN GUARANTEES ONCE CONDITIONS ARE MET "
Matthew Graham : "RTRS- EU'S REHN- ALLOWING ESM TO DIRECTLY RECAPITALISE BANKS IS A CORNERSTONE OF EFFORTS TO BREAK VICIOUS CIRCLE BETWEEN SOVEREIGN AND BANK PROBLEMS "
Matthew Graham : "RTRS- European Union finance ministers met in Brussels on Tuesday to discuss options for deeper EU economic integration, hours after euro zone ministers agreed to grant Spain an additional year to meet its deficit reduction targets."
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