MBS Live: MBS Morning Market Summary
Once again, European markets set the stage for a weaker start to the day for MBS and Treasuries. The key news was ECB's Nowotny saying that the ESM (Europe's permanent bailout fund) should be given a banking license that allows it to borrow directly from the ECB. The Euro erased all of yesterday's losses overnight but stalled out just before the domestic open. This, more than anything, has marked the turning point from which Treasuries and MBS have fought back. 10yr yields made it only into the 1.43's and Fannie 3.0 MBS only as low as 104-02 before improving steadily into the 11:00am hour. 10's are meeting resistance (possibly) here at 1.40 and we may be waiting on the 5yr auction results at 1pm before getting the next major market-moving suggestion.
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.
10:07AM :
ECON: Home Sales So Bad They ALMOST Supersede The Margin of Error
* NOTE: New home sales dropped 8.4% vs a margin of error that says they could have RISEN 4%. Year-over-year, things are closer to conclusive as the improvement is 15.1% and could only be a DECLINE of 1.6% according to the 16.7% margin of error.
Sales of new single-family houses in June 2012 were at a seasonally adjusted annual rate of 350,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.4 percent (±12.4%)* below the revised May rate of 382,000, but is 15.1 percent (±16.7%)* above the June 2011 estimate of 304,000. The median sales price of new houses sold in June 2012 was $232,600; the average sales price was $273,900. The seasonally adjusted estimate of new houses for sale at the end of June was 144,000. This represents a supply of 4.9 months at the current sales rate.
Sales of new single-family houses in June 2012 were at a seasonally adjusted annual rate of 350,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.4 percent (±12.4%)* below the revised May rate of 382,000, but is 15.1 percent (±16.7%)* above the June 2011 estimate of 304,000. The median sales price of new houses sold in June 2012 was $232,600; the average sales price was $273,900. The seasonally adjusted estimate of new houses for sale at the end of June was 144,000. This represents a supply of 4.9 months at the current sales rate.
10:00AM :
ALERT ISSUED:
European News Drags Bond Markets Weaker Overnight. Now Fighting Back
So far, this morning has been playing out like yesterday where the overnight session resulted in weaker opening levels for domestic bond markets which subsequently held their ground amid volatility in the first few hours. In today's version, we have ECB's Nowotny out overnight advocating the use of Europe's permanent bailout fund, the ESM, as a bank that can borrow directly from the ECB. The Euro rose broadly on this news, supported by the European commission's approval of a Spanish bank racapitalization and a not-much-worse than expected business sentiment reading in Germany. A weak German debt auction further fueled bond market weakness.
All of the above resulted in 10yr yields "soaring" to 1.435, a level that would have been an all-time low last week. MBS opened a few ticks weaker with Fannie 3.0's making it down to 104-02, a level that would have been an all-time high last week.
As the European session shifts gears into the domestic session, the gig may be up as the Euro looks to be stalling out after hitting its highs in the hour before the domestic open. Equities opened in positive territory briefly, but have since fallen with the Euro, further assisting bond markets in their ground holding efforts.
To that end, we'd keep an eye on the 104-04 zone in Fannie 3.0s (current levels) as that's been a supportive area so far this morning and yesterday morning. 10yr yields support kicks in first just under 1.42 and then again at overnight highs of 1.435. Breaking any higher than that and we'd dealing with the longer term pivots at 1.442 and 1.465. New Home Sales data is coming up at 10am.
All of the above resulted in 10yr yields "soaring" to 1.435, a level that would have been an all-time low last week. MBS opened a few ticks weaker with Fannie 3.0's making it down to 104-02, a level that would have been an all-time high last week.
As the European session shifts gears into the domestic session, the gig may be up as the Euro looks to be stalling out after hitting its highs in the hour before the domestic open. Equities opened in positive territory briefly, but have since fallen with the Euro, further assisting bond markets in their ground holding efforts.
To that end, we'd keep an eye on the 104-04 zone in Fannie 3.0s (current levels) as that's been a supportive area so far this morning and yesterday morning. 10yr yields support kicks in first just under 1.42 and then again at overnight highs of 1.435. Breaking any higher than that and we'd dealing with the longer term pivots at 1.442 and 1.465. New Home Sales data is coming up 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.
Adam Quinones : "...and now we have this eminent domain nonsense."
Adam Quinones : "but VB is right....I really dont want to buy bc I know the jobs situation isnt gonna get better bc technology has replaced blue collar jobs. Shadow inventory is huge and housing finance reform is VERY slow. "
Andy Pada : "exactly JW."
Jason Wilborn : "I think people got burned on the big house thing and the people dont view housing like they did say 5 years ago"
Andy Pada : "I respectfully disagree that a stable job will incentivize a 30something single individual from buying a home."
Victor Burek : "gm jw...absolotuely...but the underlying argument is still correct. housing will always follow jobs"
Jason Wilborn : "depends on the jobs created Vic"
Victor Burek : "if unemployment was at 5%, we would be in a huge housing boom right now"
Andy Pada : "people don't want to stay in one place; the first time homebuyer is a socially mobile generation."
Andy Pada : "we are now a mobile generation who has seen a collapse in an otherwise stable sector. Cultural shift"
Victor Burek : "so i dont get your paradigm shift..housing follows jobs, but you say new paraidgm is housing wont follow jobs"
Victor Burek : "once we have maybe 6 to 10 months of jobs reports over 250k..housing will start to rebound"
Ken Crute : "yeah the people getting jobs lost a $80k ayear job and now have a $40k year job "
Victor Burek : "cause unemployment is still over 8% and the underemployed are even worse"
Andy Pada : "The people who are getting jobs are not buying"
Victor Burek : "how do you know it is a new paradigm..we havent had a significant run of good jobs reports"
Ken Crute : "new pardigm? is employment now irrelevant? "
Andy Pada : "new paradigm gentlemen, you either recognize it or you may be left out."
Andy Pada : "and I disagree with the notion that jobs will increase housing."
Scott Valins : "NYC market seems to be picking up steam mainly due to skyrocketing rental rates and perhaps lots of foreign money"
Matt Hodges : "short sales are even falling apart, as banks aren't acting quick enough"
Ken Crute : "things are picking up, as far as purchase biz, but people are buying homes with deeply distressed values, short sales and foreclosures , values are still slipping. still a tidal wave of f/c's to hit the market too "
Matt Hodges : "that gave me hope, but buyers have scattered to the wind"
Matt Hodges : "spring buyers were strong, much much stronger than spring 2011"
Matt Hodges : "and those with jobs have confidence they won't be let go/transferred"
Victor Burek : "there will be no housing momentum until our nation starts adding 200k to 300k jobs per month ,consistently"
Matt Hodges : "it's lacking right now"
Matthew Graham : "Meaningful momentum in housing? What do you guys/gals think? "
Matthew Graham : "(Reuters Instant Views) TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
"We have to be cognizant of the fact that in recent months we were bouncing off a housing bottom. Our biggest issue is the notion that housing is gaining momentum and we would push back on that due to a number of issues. The backdrop shows housing is still far from healed, with the last few months showing decelerating jobs growth. Lending standards also remain tight and there is not a lot of demand for mort"
Christopher Stevens : "what investors will switch to the new FICO Mortgage Credit Score is the question... http://www.foxbusiness.com/personal-finance/2012/07/11/fico-introduces-new-mortgage-credit-score/"
Matthew Graham : "RTRS- US JUNE MEDIAN SALE PRICE $232,600, -3.2 PCT FROM JUNE 2011 ($240,200) "
Matthew Graham : "RTRS - US JUNE NEW HOME SUPPLY 4.9 MONTHS' WORTH AT CURRENT PACE VS MAY 4.5 MONTHS "
Matthew Graham : "RTRS- US JUNE DECLINE IN NEW HOME SALES LARGEST SINCE FEB 2011; JUNE SALES RATE LOWEST SINCE JAN 2012 "
Matthew Graham : "RTRS- US JUNE SINGLE-FAMILY HOME SALES -8.4 PCT VS MAY +6.7 PCT (PREV +7.6 PCT) "
Matthew Graham : "RTRS - US JUNE SINGLE-FAMILY HOME SALES 350,000 UNIT ANN. RATE (CONS 370,000) VS MAY 382,000 (PREV 369,000) "
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