MBS Live: MBS Afternoon Market Summary

Money flowed into both sides of the market today with Equities set to go out higher and bond markets having already hit 3pm at improved levels. To be fair, stocks didn't make day-over-day improvements, as they fell rather sharply overnight, tracing a move to new multi-year lows in the Euro, but were able to net gains during the domestic session. Treasuries were stronger any way you slice it, continuing the death spiral toward all-time lows in 10yr yields, something that Germany already accomplished for the past two days. Germany is referenced here on this MBS-related site due to the influence of German debt on US debt. Presently, German Bunds do much to set the tone for Treasuries in the overnight and early morning sessions. Depending on the level of activity, this relationship can persist through the EU bond market close at 11am New York time. One more degree of separation removed from Bunds, MBS are always paying some level of attention to Treasuries. Case in point, after 10's put in their second convincing ceiling bounce of the morning at 1.498, Production MBS (all Fannie 3.0 these days), broke to the positive side of a volatile, triangular trading pattern that dominated their morning and leveled off in a tight range near yesterday's highs. Despite the gains, Wells Fargo news and capacity constraints prompted more than a few lenders to reprice negatively into higher prices.

Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.

Afternoon 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 afternoon.

1:14PM  :  ALERT ISSUED: 30yr Auction Strong Like Bull (But Not Like Y'Day's 10yr). Holding Gains

11:45AM  :  ALERT ISSUED: Wells Fargo Exiting Broker Channel

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.

Thomas Nelson  :  "Wells related"

Thomas Nelson  :  "REPRICE: 2:40 PM - NYCB Worse"

Frank Ceizyk  :  "Up until the last month I didn't think it was worth "doing" but the victories I posted about on July 4th were a turning point, because none of them would have been possible without this community and the efforts of all the players who made those products possible to fund for consumers. "

Ira Selwin  :  "(12pm)"

Ira Selwin  :  "REPRICE: 2:16 PM - Franklin American Better"

SMTM  :  "This is all Capital Managment. They could still do broker deals to kingdom come if they wanted to, they could sell of loans to be CRA compliant. theres a ton of ways they could continue. They cant afford to keep funding and holding 35% of the countrys mortgages. But I do like everyones theories. "

Michael Francis  :  "We did underwrite, and every wholesale shop I worked at did too. Not sure exactly why it was different, but it was. And we loved to believe the stats....."

SMTM  :  "that is next"

Adam Quinones  :  "maybe they'll start cutting delegated shops next."

SMTM  :  "Read between the lines, they need to have "skin in the game" it was impossible for them to continue without cutting a piece out. this just so happened to be another reason to do it. the primary is capital managment my friends."

Adam Quinones  :  "yeh but you're underwriting it MF"

Paul L. Martin  :  "owe the GSE $3million GSE owns you....owe the GSE 300,000,000 you own the GSE"

Michael Francis  :  "I know AQ - But it is unfortunately true. Not all brokers are doing bad loans, but the numbers are pretty solidly against them in the aggregate. At Morgan Stanley, we stayed away from it for that very reason....."

Adam Quinones  :  "it's more about limiting aggregation I guess. "

Andy Pada  :  "AQ, I read that article, I didn't understand their factor in what could be sold to Fannie/Freddie. Maybe a company with a $3M net worth arguably should not be selling $100M a month, but what is the right #?"

Paul L. Martin  :  "or we sell some stuff to Wells"

BVG  :  "wells control"

Victor Burek  :  "or pipeline control"

John McClellan  :  "worse?"

Paul L. Martin  :  "But that seems like a mistake right?"

Thomas Nelson  :  "worse?"

Oliver S. Orlicki  :  "worse??"

Paul L. Martin  :  "REPRICE: 1:32 PM - Suntrust Worse"

Jason York  :  "everyone got that message from their wholesale lender right after another closed"

John Toepfer  :  ""We are committed to the broker channel"= "We are outta here""

Jim Begley  :  "In reading between the lines of the WF press release, it seems apparent that the view of the DOJ was that brokers were the main source of loans that had a “disparate impact” on minority borrowers. The lack of pricing control by Wells in broker originated loans seems to be a problem with the DOJ. This is not good if the attitude of Justice is that broker loans inherently discriminate against minorities. This might have even been a condition of this settlement."

Matthew Graham  :  "Solid "A""

Matthew Graham  :  "RTRS - US TREASURY - PRIMARY DEALERS TAKE $5.60 BLN OF 29-YEAR 10-MONTH BONDS SALE, INDIRECT $4.77 BLN "

Matthew Graham  :  "RTRS- U.S. 29-year 10-month bond BID-TO-COVER RATIO 2.70, NON-COMP BIDS $9.84 MLN "

Matthew Graham  :  "RTRS - U.S. SELLS $13 BLN 29-YEAR 10-MONTH BONDS AT HIGH YIELD 2.580 PCT, AWARDS 40.64 PCT OF BIDS AT HIGH "

Matthew Graham  :  "recent average BTC 2.62 for the last 4 reopenings, "

rford  :  "just gopt the WF Newsflash, correspondent onot affected"

Tom Bartlett  :  "agreed"

Mike Ford  :  "the announcement is specific stating they will stop MAKING mtg loans through INDEPENDENT mtg brokers. doesn't appear to be for loans sold to them through wholesale lenders, just no more Wells wholesale to broker to. for now anyway.."

Matt Hodges  :  "Plans to Discontinue Funding Mortgages that are Originated, Priced and Sold by Independent Brokers"

Matthew Graham  :  "read the release AR. Sounds like this is brokers only best I can tell. Interested in any other interpretations if you have them: http://www.businesswire.com/news/home/20120712006072/en/Wells-Fargo-Announces-Settlement-U.S.-Department-Justice "

Andrew Russell  :  "If they arent buying the TPO loans, I cant imagine they will buy someone else's TPO loans...that would have an additional layer making it even more risky"

Gaius Rossini  :  ""Wells Fargo is settling this matter solely for the purpose of avoiding contested litigation with the DOJ" retarded. way to go DOJ."

Lea Shaw  :  "just received confirmation from my AE that WF is exiting wholesale, email with exit dates to be sent shortly"

Bryce Schetselaar  :  "http://www.reuters.com/article/2012/07/12/idUS163519+12-Jul-2012+BW20120712"

Bryce Schetselaar  :  "reuters article says that 5% of originations are from wholesale"

John Rodgers  :  "yep sounds like a settlement to me."

Matthew Graham  :  "So although Wells notes the move is "voluntary," I'm getting the sense that all we can really glean from that is that they weren't "forced out of wholesale," but that the exit is definitely RELATED to the lawsuit, even if not made compulsory"

Matthew Graham  :  "RTRS - WELLS FARGO & CO WFC.N SAYS PLANS TO DISCONTINUE FUNDING MORTGAGES THAT ARE ORIGINATED, PRICED AND SOLD BY INDEPENDENT BROKERS "

Matthew Graham  :  "7 minutes after the Wells announcement: RTRS - WELLS FARGO ANNOUNCES SETTLEMENT WITH U.S. DEPARTMENT OF JUSTICE REGARDING MORTGAGES "

Victor Burek  :  "except all the loans wells was doing will know have to go elsewhere, which will probably impact you michael"

Roger Moore  :  "bofa..gone. chase..gone..wells gone...didn't like using any of them but not a good sign for hte channel"

Michael Owens  :  "haven't used wells in years no big deal for me."

Brent Borcherding  :  "They will close loans in their pipe and are accepting until tomorrow."

Brent Borcherding  :  "That'll be the big question, Grant."

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