MBS Live: MBS Afternoon Market Summary
Today's session has all the trappings of a good, old-fashioned wake-up call. Here we've been drifting rather pleasantly into positive enough territory to get Fannie 3.5s back into view as a production coupon and in the space of two days, they're almost off the map again (with the exception of top tier buy-down borrowers at 4.25%). Much more disconcerting than the losses themselves is how they happened. It's not as if New Home Sales, mediocre 5yr Auctions, and PMI data being moderately better than expected is enough to motivate 8bps of weakness in 10yr yields in any regular market. Those things look the events of the day, but the bigger story was in tradeflows where volume picked up for the first time in 4 sessions. US bond markets spent much of their energy chasing a much bigger sell-off in German Bunds. Bother had technical components with the notable example being 2.46 in 10's. Though that wasn't in play today, yields were resting there in low volume off and on since the middle of last week. The pace of today's move higher owes much to the overall rejection of that hugely important technical level. That it occurred with higher volume simply adds to the ominousness. Counterpoint: 2.62 was also a technical level and arguably acted as support today, so it's fair to say we're still drifting sideways overall ahead of next week's more important data and that the recent strength merely represented a lower-volume lull in the action.
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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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.
3:15PM :
Off Lows and Aiming to Stay That Way Into Close
Given the relatively serious-looking run at the 2.62 inflection point in 10's, and the fact that we're past 3pm, tensions are running lower between now and 5pm. Translation: 10yr Treasuries moved higher, knocked on a well-established ceiling that used to be a well established floor, and couldn't find a way to get upstairs. MBS were reassured by that move and improved with Treasuries back to the morning trading range.)
Fannie 3.5s are 9 ticks off their lows at 100-21. Fannie 4.0s are back up over 103-21, which had been an important supportive ledge. 10yr yields are down to 2.588, which is just on the other side of this morning's upper 2.59 highs. Bottom line, the sell-off has likely run it's course for today.
Fannie 3.5s are 9 ticks off their lows at 100-21. Fannie 4.0s are back up over 103-21, which had been an important supportive ledge. 10yr yields are down to 2.588, which is just on the other side of this morning's upper 2.59 highs. Bottom line, the sell-off has likely run it's course for today.
1:25PM :
Obama: Home Ownership Clearest Expression of Middle-Class Security
From The President's prepared remarks:
"Now, if a good job and a good education have always been key stepping stones into the middle class, a home of your own has been the clearest expression of middle-class security. That changed during the crisis, when millions of middle-class families saw their home values plummet. Over the past four years, we've helped more responsible homeowners stay in their homes, and today, sales are up, prices are up, and fewer Americans see their homes underwater."
"But we're not done yet. The key now is to encourage homeownership that isn't based on bubbles, but is instead based on a solid foundation, where buyers and lenders play by the same set of rules, rules that are clear, transparent, and fair. Already, I've asked Congress to pass a good, bipartisan idea -- one that was championed by Mitt Romney's economic adviser -- to give every homeowner the chance to refinance their mortgage and save thousands of dollars a year. I'm also acting on my own to cut red tape for responsible families who want to get a mortgage, but the bank says no. And we'll work with both parties to turn the page on Fannie and Freddie, and build a housing finance system that's rock-solid for future generations."
"Now, if a good job and a good education have always been key stepping stones into the middle class, a home of your own has been the clearest expression of middle-class security. That changed during the crisis, when millions of middle-class families saw their home values plummet. Over the past four years, we've helped more responsible homeowners stay in their homes, and today, sales are up, prices are up, and fewer Americans see their homes underwater."
"But we're not done yet. The key now is to encourage homeownership that isn't based on bubbles, but is instead based on a solid foundation, where buyers and lenders play by the same set of rules, rules that are clear, transparent, and fair. Already, I've asked Congress to pass a good, bipartisan idea -- one that was championed by Mitt Romney's economic adviser -- to give every homeowner the chance to refinance their mortgage and save thousands of dollars a year. I'm also acting on my own to cut red tape for responsible families who want to get a mortgage, but the bank says no. And we'll work with both parties to turn the page on Fannie and Freddie, and build a housing finance system that's rock-solid for future generations."
1:12PM :
ALERT ISSUED:
More New Lows for MBS After 5yr Auction; More Reprice Risk
Treasuries have shuffled to slightly higher yields on the day following a somewhat weak 5yr Auction. The auction, in and of itself, may bot be the culprit for the entirety of the movement as technicals were triggered with only moderate selling (not to mention the general snowball selling all day).
10's are now up to 2.61's and Fannie 4.0s and 3.5s are at new lows of the day, increasing negative reprice risk for any lenders how haven't already repriced.
10's are now up to 2.61's and Fannie 4.0s and 3.5s are at new lows of the day, increasing negative reprice risk for any lenders how haven't already repriced.
11:23AM :
ALERT ISSUED:
Negative Reprice Risk Increasing as MBS hits new lows.
Both the FNMA 3.5 and 4.0 coupons have fallen to the lows of the day. Negative reprices are possible.
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.
Bart Patterson : "REPRICE: 2:54 PM - Provident Funding Better"
Jerrod Nash : "REPRICE: 1:59 PM - PennyMac Worse"
Tom Schwab : "REPRICE: 1:41 PM - Franklin American Worse"
Rob Clark : "REPRICE: 1:39 PM - Stearns Lending Worse"
Tom Schwab : "REPRICE: 1:17 PM - AMC Worse"
Matthew Graham : "RTRS - US TREASURY - PRIMARY DEALERS TAKE $13.21 BLN OF 5-YEAR NOTES SALE, INDIRECT $18.84 BLN "
Matthew Graham : "RTRS- U.S. 5-YEAR NOTES BID-TO-COVER RATIO 2.46, NON-COMP BIDS $36.04 MLN "
Matthew Graham : "RTRS - U.S. SELLS $35 BLN 5-YEAR NOTES AT HIGH YIELD 1.410 PCT, AWARDS 48.70 PCT OF BIDS AT HIGH "
Matthew Carver : "REPRICE: 11:54 AM - Flagstar Worse"
Joe Daquino : "Market is still in a frenzy, even with rates rising. People want to own a home, because we are still in a zone where in some areas, a mortgage payment is less than or equal to what you would pay in rent."
Joe Daquino : "Maybe in your area Chad. Where I live, in the Temecula Valley, CA., they can't build homes fast enough. The amount of homes being constructed right now is amazing. People literally camping out to get 1st crack."
Chad Horvath : "The rate hike has really slowed down new construction, I work for a builder. "
Chris Kopec : "Agreed JR. That June number in my opinion was a "run to the door" for everyone committed to buying a new home.....sign the contract, lock the deal, and avoid further damage."
John Rodgers : "We'll see those numbers fall off a cliff in July"
Drexel Hill Mortgage, Inc. : "weren't thos JUNE sales locked most likely in may or earlier?"
MMNJ : "why are we getting blasted? Because I am floating stuff....very simple"
David Rudnick : "ouch... why we getting blasted June/May style?"
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