MBS Live: MBS Afternoon Market Summary
Things were looking slightly risky earlier today. Bond markets were weaker overnight on Euro bullishness--ostensibly the result of ECB's Nowotny calling for a bank license for the ESM bailout fund. It looked like we might continue facing challenges for a brief moment after the 5yr auction. But in hindsight, there was precious little volume or volatility seen as a result of the auction and the reality quickly set in that we'd seen the day's trading come and go by the time European bond markets closed and the Fed's Twist buying results were announced at 11:00am. Since then, an Egan Jones downgrade of Italian sovereign debt and a general stalling-out of the Euro and equities at morning highs has helped bond markets get a second wind of sorts. Actually, it's more of a light breeze as the entirety of today's price action has been well contained by yesterday's range. 10yr yields drifted back down into the 1.39's and Fannie 3.0 MBS made it back near their highs of the day.
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 4:04 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.
1:27PM :
ALERT ISSUED:
Bond Markets Slightly Weaker, But Mostly Sideways After 5yr Auction
We've given today's 5yr auction about as much time as we can to produce a meaningful response on the screen and so far, we've been let down. If anything, Treasuries and MBS are very slightly weaker coming out of the 1pm auction results, but almost imperceptibly so. There wasn't much volume in the reaction and prices are still well off their morning lows.
As for the auction itself, it was on the weak side of fair with lower than average demand at a higher than expected yield. But if we consider that this was the lowest yielding 5yr auction of all time and that we saw very little by way of concessionary weakness leading into it, we can overlook some of that weakness afterword.
Despite the flat response so far, it's too soon to assume that the rest of the day's trading will be similarly flat. We're somewhat concerned about an uptrend in 10yr yields intact since 10am. If that trend continues, it could eventually put some pressure on MBS to shed a few ticks. Reprice risk picks up slightly at 104-04 and more so with a break of the day's lows at 104-02 in Fannie 3.0's. Currently, we're holding around 104-05 while 10yr yields have risen to 1.4194.
As for the auction itself, it was on the weak side of fair with lower than average demand at a higher than expected yield. But if we consider that this was the lowest yielding 5yr auction of all time and that we saw very little by way of concessionary weakness leading into it, we can overlook some of that weakness afterword.
Despite the flat response so far, it's too soon to assume that the rest of the day's trading will be similarly flat. We're somewhat concerned about an uptrend in 10yr yields intact since 10am. If that trend continues, it could eventually put some pressure on MBS to shed a few ticks. Reprice risk picks up slightly at 104-04 and more so with a break of the day's lows at 104-02 in Fannie 3.0's. Currently, we're holding around 104-05 while 10yr yields have risen to 1.4194.
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.
Mike Drews : "exactly my point"
Ira Selwin : "Thats not a bad thing"
Mike Drews : "what an awesomely boring mbs day"
Matthew Graham : " - EGAN-JONES DOWNGRADES ITALY SOVEREIGN RATING TO CCC-PLUS FROM B-PLUS"
Brent Borcherding : "There seems to be more and more chatter about it, and its hard to argue that it wouldn't be for the best, overall. But would love to hear someone argue it."
BVG : "I hope that's the case BB"
Matthew Graham : "RTRS - US TREASURY - PRIMARY DEALERS TAKE $18.26 BLN OF 5-YEAR NOTES SALE, INDIRECT $14.90 BLN"
Matthew Graham : "RTRS - U.S. 5-YEAR NOTES BID-TO-COVER RATIO 2.71, NON-COMP BIDS $25.51 MLN "
Matthew Graham : "RTRS - U.S. SELLS $35 BLN 5-YEAR NOTES AT HIGH YIELD 0.584 PCT, AWARDS 12.20 PCT OF BIDS AT HIGH"
Brent Borcherding : "What do you think? Are we moving to a point where the big banks may be broken up in the next few years?"
Brent Borcherding : "Values, no, but buying power is with rates at 3.375 vs 6.5% 5-8 years ago...that gives you 30%+ more buying power."
Scott Valins : "BB - values are are at pre 2000 levels in your area?"
Brent Borcherding : "Trying to make up for it all at once you can see."
Brent Borcherding : "Hey, slow to get into today, but thought I'd add a couple things. In my market, I'm seeing a large increase of first time home buyers that may not have been buyers in previous markets. A lot of Service industry types, bartenders, waiters/waitresses etc. are entering the buyers market here. They could have never afforded homes here in the last 12 years & they are taking advantage. I respect AP's views, but I think looking solely at the young mobile professional for the signs of housing is loo"
Michael Mitchell : "I don't see Provident for example going with 2.25% if they choose..."
Michael Mitchell : "There will be wholesale lenders that keep their compensation plans low"
Andy Pada : "and price brokers out of the game..."
Michael Mitchell : "So- If every lender follows suit... And we as brokers have 10 different compensation plans we didn't choose... That should settle steering."
Michael Mitchell : "I ern 1% across the board. I'm about to get a raise"
Michael Mitchell : "Sorry Scott- There was a lack of sarcasm font"
BVG : "sarcasm---- me smells it"
Scott Valins : "MM how does 2.25 for all brokers help borrower? You think avg charges for brokers is higher than 2.25?"
Joel Marks : "just confirmed with my FAMC rep and it's real."
Michael Mitchell : "2.25% for all brokers is certain to help the borrower"
Scott Valins : "whoa JY thats huge"
Rob Clark : "We just need to make it until January when Romney repeals Frank/Dodd"
Victor Burek : "another hit on brokers"
Jason York : "Interesting news - Hello Everyone,
I wanted to inform everyone that Franklin American Mortgage will be sending out a memo today at 12:00est going over an important change to LO Compensation.
Due to the Department of Justice/Wells settlement which FAMC has reviewed very thoroughly with legal council, we will be setting a flat for lender paid compensation of 2.25% (no exceptions) for all brokers effective August 1. Brokers will no longer be able to offer borrower paid loans.
"
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
