MBS Live: MBS Afternoon Market Summary
Treasury yields were higher overnight in response to general upward from German Bunds after Moody's put Germany on ratewatch negative late last night. This led to a weaker open for MBS and Treasuries and both continued selling into 9am before putting their foot down and beginning a slog back in the other direction. Strength came partially from headlines/data including an unfavorable Troika assessment of Greece's current path to debt reduction (additional debt restructuring may be needed!) and additionally from favorable supply/demand technicals across the board. Given the concomitant falling of the European currency, we'd tend to give more weight to the Greece news. Any way you slice it, MBS and Treasuries both regained greener pastures with Fannie 3.0's making it back to 104-09 from lows of 104-00 and 10yr yields making it back to 1.4026 after highs over 1.46! Quite a swing.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
|
|
|
||||||||||||
| Pricing as of 4:09 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.
3:36PM :
ALERT ISSUED:
Sufficient Losses To Warrant Increase Reprice Risk In Some Cases
As has been the case with so many instances of reprice risk in recent months, this one won't affect most lenders as most lenders released rate sheets when MBS were actually lower than they are now. But for lenders that fall into one of the three categories below, risks are elevated:
1. Released rates exceptionally late (after 11am)
2. Repriced positively in the afternoon
3. Have a tendency to reprice when prices are falling regardless of initial rate sheet time.
Bottom line, Fannie 3.0's are 5 ticks off their highs, which is just about the edge of reprice risk territory. We might see one or two at current levels, but the main point of the alert is to let you know to keep an eye out for any further losses. Crossing 104-06 would increase reprice risk moderately.
1. Released rates exceptionally late (after 11am)
2. Repriced positively in the afternoon
3. Have a tendency to reprice when prices are falling regardless of initial rate sheet time.
Bottom line, Fannie 3.0's are 5 ticks off their highs, which is just about the edge of reprice risk territory. We might see one or two at current levels, but the main point of the alert is to let you know to keep an eye out for any further losses. Crossing 104-06 would increase reprice risk moderately.
11:23AM :
ALERT ISSUED:
Full Recovery From Morning Weakness For MBS Despite Limited Data
Suppose it's last Friday or even yesterday morning and you're a Treasury trader perceiving an opportunity to short something at or close to an all time low either as a short-term tactic or a long term strategy. Then suppose things don't really weaken enough for your short position to make sense. Now you have to "cover" your short, which, in it's simplest sense, just makes you another buyer this morning.
That short-covering bid is part of a broader ongoing correction after earlier weakness failed to establish any momentum. Did any of the economic data help? Possibly to small extent, but the real story is in the short covering and other dark and mysterious "behind the scenes" market dynamics.
Tradeflows have also played a role as high-frequency trades have taken advantage of limited sell-side opposition to bring yields lower. The domestic stock market opening into weaker territory also helped flesh out an opportunity for a technical bounce at Friday's closing yields.
The bottom line is that bond markets have bounced back into positive territory after trading briefly into weaker territory this morning. MBS are back near all-time highs with Fannie 3.0s up 4 ticks at 104-09 and 10yr yields are down to 1.4279.
That short-covering bid is part of a broader ongoing correction after earlier weakness failed to establish any momentum. Did any of the economic data help? Possibly to small extent, but the real story is in the short covering and other dark and mysterious "behind the scenes" market dynamics.
Tradeflows have also played a role as high-frequency trades have taken advantage of limited sell-side opposition to bring yields lower. The domestic stock market opening into weaker territory also helped flesh out an opportunity for a technical bounce at Friday's closing yields.
The bottom line is that bond markets have bounced back into positive territory after trading briefly into weaker territory this morning. MBS are back near all-time highs with Fannie 3.0s up 4 ticks at 104-09 and 10yr yields are down to 1.4279.
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.
Ira Selwin : "Yes, they do CB"
Charles Beasley : "Does BB&T ever do a mid day reprice, I dont recall ever seeing one?"
Matthew Graham : "that implies that loans are being originated that could one day contribute to 2.5 coupon liquidity, but there is no FNMA 2.5 trading in the TBA-MBS market."
Eric Franson : "REPRICE: 2:04 PM - Wells Fargo Better"
Jason Wilborn : "does that give us 2.5 coupon"
Jason Wilborn : "I heard Chase has 2.75% on a 30 year on their rate sheet"
Matthew Graham : "maybe it isn't important? that's my vote"
Justin Dudek : "i would say 95% maybe 99% of the US doesnt even know what the 10 year is"
Justin Dudek : "it really hasnt been brought up as a topic. is that because most people are not educated enough to understand anything that has to do with rates?"
Matthew Graham : "much is made of that, but I've never considered it. I could be wrong, but I don't care about the election year. Didn't last time either. But I will say that many intelligent people DO seem to care, so I'm just giving you my armchair opinion here without going back and crunching numbers."
Justin Dudek : "how are rates affected by an election year?"
Matthew Graham : "yeah, living through 2010 is not good practice for indefinite floating..."
Curt Sandfort : "I locked my own refi about a month ago, never dreamed we would see 106-11"
Victor Burek : "i agree...i see no reason to lock that today"
Matthew Graham : "Not sure why you wouldn't just set a stop-loss and pull the trigger if things got uncomfortable"
Matthew Graham : "there's no way to know for sure that rates will stay "depressed" for that long, but by all indications we have now, chances are good. In other words, market inertia is in your favor."
Matthew Graham : "in all seriousness, 4-ish months feels like a fairly short time in the current global economic climate."
Matthew Graham : "oh, hang on, let me grab my good crystal ball..."
Bert Swyers : "got it, how long do rates stay this low? I am biulding a new house and it wont be done until 11-15-12"
Matt Hodges : "REPRICE: 12:33 PM - Suntrust Better"
Kent Mikkola #353976 : "I don't know if you can do a pricipal reduction... may have to just lower loan amount "
Kent Mikkola #353976 : "www.impacwholesale.com"
Kent Mikkola #353976 : "try Impac Curt"
Curt Sandfort : "MGIC, I think it was LPMI if that matters"
Kent Mikkola #353976 : "who is the MI thru?"
Curt Sandfort : "okay here goes: n/o/o w/ mi, 112 ltv, no waiver"
Matthew Graham : "Euro at fresh multi-year lows"
Matthew Graham : "heard it here first: "It might seem like Greece is a bit out of the spotlight at present, and that could prove to be true, but the Troika will be in Greece today and so there's potential at least for news from that old friend.""
Jeff Anderson : "REPRICE: 11:41 AM - Chase Better"
Matthew Graham : "RTRS- GREECE SEEN MISSING EU/IMF DEBT REDUCTION TARGETS, FURTHER DEBT RESTRUCTURING NECESSARY - EU OFFICIALS "
Jeff Anderson : "They did on one I did a few months ago, Jill."
Grant R. Menard : "Jill i belive its the HUD 1 Date"
Jill Statz : "on FHA...do they go off of the Sheriff's sale date of the foreclosure to figure the 3 yrs?"
Adam Quinones : "yes...many lenders are dealing with expensive hedging costs right now. That is one big reason why your pricing isnt as good as you'd expect. Wider primary/secondary spreads...."
Brett Boyke : ""So you're telling me there's a chance?" - Lloyd"
Jeff Anderson : "So is that one possible reason why we don't see the better pricing we "think" we should be seeing. Lenders have over hedged? And yes, I know pricing is phenomenal. :)"
Adam Quinones : "lenders who stay optimal into a big rally risk having to buy back their hedges at a higher price (if they cant deliver the loans bc they didnt pull-through). This is the equivalent of putting on a short position and having the market rally. Not good."
Rob Clark : "REPRICE: 11:13 AM - Provident Funding Better"
Matthew Graham : "much more "normal" vs y'day"
Matthew Graham : "RTRS- DEALERS SUBMITTED $3.80 BLN OF TREASURIES FOR CONSIDERATION IN FED PURCHASE -NY FED "
Matthew Graham : "RTRS - FED BOUGHT $1.81 BILLION OF TREASURIES MATURING BETWEEN FEB 2036 AND MAY 2042 -NY FED "
Matthew Graham : "Fed Twist buying wrapping up now, should have results and potential market reaction momentarily"
Read what our user's have to say about MBS Live on LinkedIn.
» Start a two week free trial of MBS Live.
MBS Market Alerts
