MBS Live: MBS Afternoon Market Summary
Fed speeches from Bernanke himself are always to be respected.  The twice-a-year congressional testimonies offer some of the clearest examples of that.  Despite the fact that we couldn't much imagine what more Bernanke could say that hadn't been said already, it's in that space between imagination and reality where unexpected comments do an untoward amount of damage.  Now that the speeches have come and gone, we can look back on both days and easily see how VERY little bond markets moved during the Q&A.  Historically, that's been prime time for tape bombs!  After today, it's probably fair to bump up the extent to which Housing Starts data had an impact yesterday morning.  There's no question that Bernanke's prepared remarks mattered--and probably more than 50%--when they were first released, but after that, you'd be hard pressed to point to any other spot on the 2-day chart and say "see this move?  that's when Bernanke said this."  In fact the only salient opportunity to say that about any market event was with this morning's Philly Fed Survey.  Conclusion: the Fed has locked in their final answer for now.  The next great unknown is how they'll answer the next question and the way they do that will depend on the economic data in the coming weeks.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
97-00 : -0-13
FNMA 3.5
100-26 : -0-10
FNMA 4.0
103-25 : -0-07
FNMA 4.5
105-23 : -0-06
GNMA 3.0
98-02 : -0-08
GNMA 3.5
101-25 : -0-06
GNMA 4.0
104-07 : -0-04
GNMA 4.5
105-27 : -0-08
FHLMC 3.0
96-23 : -0-13
FHLMC 3.5
100-17 : -0-11
FHLMC 4.0
103-19 : -0-06
FHLMC 4.5
105-02 : -0-10
Pricing as of 4:05 PM EST
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.
3:58PM  :  ALERT ISSUED: Weaker Territory After Hours; Additional Negative Reprice Risk
Negative reprice risk is getting old at this point, but potentially a bit more developed here for lenders that haven't already repriced. 10yr yields broke their session highs moments ago and while they haven't taken off in massive move higher, the pressure on MBS is evident. Fannie 3.5s and 4.0s each returned to their lowest levels of the day though they have yet to break any lower as of this moment. That looks like it may happen if illiquid MBS markets can manage to tune in long enough to make those trades. Fannie 3.5s are down 12 at 100-24 currently and 4.0s are down 8 ticks at 103-24.
1:10PM  :  ALERT ISSUED: Volatility After TIPS Auction. MBS Lower. Reprice Risk Persists
10yr yields are up to 2.532--their highs of the day--after the TIPS auction at 1pm. It's unclear whether the weakness is directly related to the auction or if it's a tradeflow consideration that will soon be resolved. Either way, MBS remain under pressure with both Fannie 3.5s and 4.0s near their lows of the day. Negative reprice risk has been omnipresent since rate sheets came out, but we're generally in the same position we have been: risks are present, but not every lender will reprice. If MBS meaningfully break their lows, that could change, but we're not there yet.
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.
Nate Miller  :  "REPRICE: 1:42 PM - Caliber Funding Worse"
Eric Franson  :  "REPRICE: 12:08 PM - Wells Fargo Worse"
Matthew Graham  :  "RTRS - BERNANKE SAYS DO NOT EXPECT TO ALLOW ASSETS TO ROLL OFF FED BALANCE SHEET BEFORE STARTING TO RAISE INTEREST RATES "
Matthew Graham  :  "RTRS- BERNANKE SAYS FED CONFIDENT IT WILL NOT RAISE INTEREST RATES BEFORE IT REACHES THRESHOLDS ON UNEMPLOYMENT AND INFLATION THAT IT HAS LAID OUT "
Matthew Graham  :  "RTRS- BERNANKE SAYS US FACES RISK FROM SIGNIFICANT PART OF POPULATION HAVING PROBLEMS IN ACCESSING MORTGAGE CREDIT, EVEN THOUGH THEIR CREDIT IS GOOD ENOUGH "
Matthew Graham  :  "RTRS- BERNANKE SAYS IMPORTANT TO GET US HOUSING INSTITUTIONS INTO ORDER "
Matthew Graham  :  "RTRS- BERNANKE SAYS FED WILL PAY ATTENTION TO MORTGAGE RATES AND AFFORDABILITY "
David Z.  :  "No tightening for foreseeable future"
Matthew Graham  :  ""certainly we have to pay attention to mortgage rates and affordability""
Matthew Graham  :  "ha, he didn't really answer"
Ted Rood  :  ""Prepare for growing mortgage industry layoffs"?"
Matthew Graham  :  ""what would Fed do if interest rates spike?" is the question he's currently responding to."
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