MBS Live: MBS Afternoon Market Summary
There was a time (and may be again) where markets cared about the International Trade report. Economic Calendars of various shapes and sizes routinely rank it as 'top tier,' but with the proliferation of the data-driven Fed tapering concept, no one really cares about the Trade Deficit right now, and especially not today's. Traders were far more content watching other trades--the few that were coming across--for cues both before and after the morning's economic data. Said trades were distinctly unrelated to the data release despite the fact that the report caused many firms to upgrade their estimates of Q2 GDP revisions. Treasury yields topped out shortly after the stock market opened and that was it for the day's range. MBS underperformed moderately and managed to hit new lows in the afternoon, but in the context of Friday's movement, continue to flatline in the same post-payrolls range. Notably, the 3yr auction may have provided a slight boost at 1pm (preserving the range). Even more notable was the fac that the most dovish Fed speaker on the FOMC(Evans) said September tapering is possible and markets didn't react. They're either very tuned out (volume supports this) or tapering possibilities are no longer a surprise (or Evans did enough to balance that part of his speech with a separate part about how very long the Fed was likely to keep low interest rates in place).
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.
3:10PM :
After Prices Level Off Again, Trouble Moving Back Up (Again)
MBS are off their lows following the 3yr Auction and have generally held around these levels for more than an hour, but are struggling to make it any higher.
10's improved at the same time, falling from what were essentially the high yields of the day, close to their lows just now before hitting the floor before making any further progress. That keeps the lows at 8:18am and the highs at 9:51am intact as the day's range as we cross the 3pm pit close.
This technical resistance combined with some spread weakness suggests tougher going for MBS as far as clawing back up toward morning levels, and it's eerily similar to the first small selling spree and correction heading into the noon hour. "Eerily" doesn't necessarily connote negativity here, but it definitely doesn't connote positivity either (if anything at all). Bottom line: While negative reprices are less of a risk than they were, if you were holding out for a positive reprice into the afternoon, prospects are increasingly dim at the moment.
10's improved at the same time, falling from what were essentially the high yields of the day, close to their lows just now before hitting the floor before making any further progress. That keeps the lows at 8:18am and the highs at 9:51am intact as the day's range as we cross the 3pm pit close.
This technical resistance combined with some spread weakness suggests tougher going for MBS as far as clawing back up toward morning levels, and it's eerily similar to the first small selling spree and correction heading into the noon hour. "Eerily" doesn't necessarily connote negativity here, but it definitely doesn't connote positivity either (if anything at all). Bottom line: While negative reprices are less of a risk than they were, if you were holding out for a positive reprice into the afternoon, prospects are increasingly dim at the moment.
12:37PM :
ALERT ISSUED:
Reprice Risk Returns as MBS hit New Lows
Although it's only by a tick in both cases, Fannie 3.5 and 4.0 MBS have edged down to new lows of the day (at 100-17 and 103-25 respectively). 10's are pushing against their intraday ceiling at 2.66 ahead of the 3yr auction. We may be seeing some auction concession here, or it could simply be tradeflows. Whatever it is, it's not much, and not looking "dire" as far as the big picture is concerned, but it does increase the risks of negative reprices (this time, just a bit more than the day's first alert).
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.
Matt Hodges : "REPRICE: 2:08 PM - Suntrust Worse"
Ira Selwin : "REPRICE: 1:18 PM - Chase Worse"
Matthew Graham : "back to Evans and closer to home: RTRS- EVANS: RECENT JUMP IN MORTGAGE RATES WON'T HOLD BACK ECONOMY AS MUCH AS HAD EARLIER THOUGHT "
Ira Selwin : "zzzzz"
Ira Selwin : "you're seeing it"
David Rudnick : "sooo... whats the expected reaction?"
Victor Burek : "B- from santelli"
Matthew Graham : "RTRS- U.S. SELLS $32 BLN 3-YEAR NOTES AT HIGH YIELD 0.631 PCT, AWARDS 90.49 PCT OF BIDS AT HIGH "
Matthew Graham : "RTRS - EVANS SAYS HE BELIEVES "FAIR AMOUNT" OF RECENT LOW INFLATION TO BE TRANSITORY "
Matthew Graham : "RTRS- EVANS SAYS OWN OUTLOOK FOR BOND BUYING IS CONSISTENT WITH BERNANKE'S VIEW THAT PROGRAM WILL END BY MID-2014 ."
Matthew Graham : "RTRS- FED'S EVANS SAYS HE WOULD NOT RULE OUT CUTS TO BOND BUYS TO BEGIN NEXT MONTH "
Matthew Graham : "RTRS- FED IS "QUITE LIKELY" TO REDUCE MONTHLY BOND BUYS STARTING LATER THIS YEAR -EVANS "
Curt Sandfort : "This is an FHA file obviously, because it's only 3 years. They surrendered the house, no reaffirm, etc. not that it should matter, I still thought the discharge would be the magical date."
Brent Borcherding : "Not until the deed is filed is it complete, though."
Jason York : "not saying that is wrong, but when someone files a BK, and the house is included, they are giving up ownership to that house, right?"
Clayton Sandy : "Agree with Brent. Until the home is out of the person's name, it's stil theirs. "
Jason York : "which I agree with, as long as the person didn't continue to live in the house free"
Brent Borcherding : "It's gonna be the date the bank filed the trustees deed."
Jason York : "i think the problem with this scenario is that FNMA doesn't address the situation where the FC is included in the Bk, only the timeline on a BK and the timeline on a FC, I've heard both ways, as one UW said that BK trumps all"
Alan Craft : "Last one I dealt with was Flagstar and they said the sale date"
Brian McFarlane : "It should be discharge date, but good luck getting an U/W to agree with you."
Ken Crute : "FHA goes off discharge date "
Curt Sandfort : "stearns u/w disagrees with you joon, but I'm escalating. discharge should be the end all be all date IMO"
joon choi : "discharge date"
Curt Sandfort : "client lost home in a bk, discharged 3 yrs ago, ch7. are we going off the bk discharge date, or the date the bank filed the trustees deed?"
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