MBS Live: MBS Morning Market Summary
After an inconsequential overnight session deposited domestic bond markets at unchanged opening levels, MBS have managed to slowly and steadily work their way higher. The gains are moderate at best, but are more than Treasuries have been able to muster. Therein lies the clue about the "inconsequential" nature of today's gains. Even if volume were earth-shatteringly high, we still have a benchmark interest rate environment (looking at you, 10yr Treasuries) that's stuck in a range and so far not looking intent on a meaningful test of that range. 10's have remained well above the 2.46 inflection point after 2 overnight bounces at 2.465 and another quasi attempt just after the release of weaker-than-expected Existing Home Sales data. Volume, volatility, and participation are low. The happy circumstance is that the general lack of passion is once again serendipitously supportive for MBS (data could be a factor as well, but until we're pushing boundaries in terms of recent trading ranges, it doesn't much matter).
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.
10:10AM :
ECON: Existing Home Sales Weaker Than Expected
- Existing Home Sales 5.08 mln vs 5.25 mln forecast
- Inventory = 2.19 mln units or 5.2 months
- Median Price +214,200, up 13.5 pct YoY
- 15 pct of sales were distressed, lowest since records began in October 2008 and down 3 pct vs May
Market Reaction: brief spike into slightly stronger territory, but not much, if any, follow through yet.
Existing-home sales declined in June but have stayed well above year-ago levels for the past two years, while the median price shows seven straight months of double-digit year-over-year increases, according to the National Association of Realtors®.
Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 1.2 percent to a seasonally adjusted annual rate of 5.08 million in June from a downwardly revised 5.14 million in May, but are 15.2 percent higher than the 4.41 million-unit level in June 2012.
Lawrence Yun, NAR chief economist, said there is enough momentum in the market, even with higher interest rates. “Affordability conditions remain favorable in most of the country, and we’re still dealing with a large pent-up demand,” he said. “However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro area market.”
- Inventory = 2.19 mln units or 5.2 months
- Median Price +214,200, up 13.5 pct YoY
- 15 pct of sales were distressed, lowest since records began in October 2008 and down 3 pct vs May
Market Reaction: brief spike into slightly stronger territory, but not much, if any, follow through yet.
Existing-home sales declined in June but have stayed well above year-ago levels for the past two years, while the median price shows seven straight months of double-digit year-over-year increases, according to the National Association of Realtors®.
Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 1.2 percent to a seasonally adjusted annual rate of 5.08 million in June from a downwardly revised 5.14 million in May, but are 15.2 percent higher than the 4.41 million-unit level in June 2012.
Lawrence Yun, NAR chief economist, said there is enough momentum in the market, even with higher interest rates. “Affordability conditions remain favorable in most of the country, and we’re still dealing with a large pent-up demand,” he said. “However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro area market.”
9:07AM :
MBS Slightly Stronger, Outperforming Treasuries
The overnight session was largely uneventful for Treasuries though some mention should be made of the 2.465% technical level in 10yr yields. Even though trading activity is nothing special so far today, 2.465 was the scene of multiple bounces, further suggesting the technical significance of this zone of yields between 2.44 and 2.47 that has yet to be crossed since late June.
Treasuries hit the domestic session in roughly unchanged territory and have edged just slightly higher in yield since then (2484). MBS have moved a few ticks into positive territory with Fannie 3.5s up 2 ticks at 101-10 and Fannie 4.0s up 3 ticks at 104-05. Equities futures are right in line with Friday's 4pm levels.
The morning's only relevant piece of economic data is Existing Home Sales at 10am.
Treasuries hit the domestic session in roughly unchanged territory and have edged just slightly higher in yield since then (2484). MBS have moved a few ticks into positive territory with Fannie 3.5s up 2 ticks at 101-10 and Fannie 4.0s up 3 ticks at 104-05. Equities futures are right in line with Friday's 4pm levels.
The morning's only relevant piece of economic data is Existing Home Sales at 10am.
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.
Andrew Benson : "I don't think this weakness in home sales has anything to do with rates. Those will show in July."
Ted Rood : "Many of my borrowers have exhibited symptoms, want to know why that 5/2 rate quote is no longer available!"
Jeff Anderson : "GM, all. Wow. I thought that info would have been more in the #'s next month. The June purchase closings weren't locked? Must not have been MBSLive Members."
Ted Rood : "Who would have thought rates going up could hurt home sales?"
Matthew Graham : "RTRS- US NAR SAYS 15 PCT OF U.S. JUNE EXISTING HOME SALES WERE DISTRESSED, LOWEST SINCE RECORDS BEGAN IN OCT 2008, VERSUS 18 PCT IN MAY "
Matthew Graham : "RTRS- US JUNE NATIONAL MEDIAN PRICE FOR EXISTING HOMES $214,200, +13.5 PCT FROM JUNE 2012 "
Matthew Graham : "RTRS- US JUNE INVENTORY OF HOMES FOR SALE 2.19 MLN UNITS, 5.2 MONTHS' WORTH "
Matthew Graham : "RTRS - US JUNE EXISTING HOME SALES -1.2 PCT VS MAY +3.4 PCT (PREV +4.2 PCT)-NAR "
Matthew Graham : "RTRS- US JUNE EXISTING HOME SALES 5.08 MLN UNIT ANNUAL RATE (CONS 5.25 MLN), VS MAY 5.14 MLN (PREV 5.18 MLN)-NAR "
Jason Anker : "Thats usda They like payment shock"
Victor Burek : "I don't do USDA, but I think that is more a overlay"
Matt Hodges : "USDA question - i haven't run GUS yet - is it common to get a payment shock warning on USDA? Or is that more likely a lender overlay"
Gus Floropoulos : "Pimco's Gross Says Fed Will Tighten Policy in 2016 at Earliest,,,,,,,,wonder what this really means"
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