MBS Live: MBS Afternoon Market Summary
The biggest story of the day was that there continue to be no big stories since last week's FOMC Minutes which arrested the progressing sell-off for bond markets. Since settling down on Thursday, both MBS and Treasuries have essentially spent the intervening time moving sideways to slightly higher in price in fairly light volume. Things lightened up appreciably into the afternoon hours today, leaving some supply/demand imbalances that favored sellers late. But even after the weakness, production MBS coupons are still positive on the day, a few ticks under their best levels since earlier this month.
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.
3:28PM :
ALERT ISSUED:
Some Weakness For MBS In Late-Day, Light Liquidity
After hitting the day's best levels just after 1pm, both MBS and Treasuries have been on the retreat to a small extent, though the weakness hasn't carried either through their weaker levels earlier this morning. Fannie 3.0s are up 3 ticks on the day but down 4 ticks from their highs, currently at 103-11 while 10yr yields have bounced from the high 1.61's to 1.6335 currently.
The relative absence of positive reprices earlier in the day combined with the overall narrowness of the day's range should serve to limit negative reprice potential, not to mention the fact that prices are still in line with levels that prevailed while rate sheets were coming out this morning. That said, we're not especially holding out for positive reprices at this point either.
The relative absence of positive reprices earlier in the day combined with the overall narrowness of the day's range should serve to limit negative reprice potential, not to mention the fact that prices are still in line with levels that prevailed while rate sheets were coming out this morning. That said, we're not especially holding out for positive reprices at this point either.
1:30PM :
2yr Treasury Auction Passes Without A Trace. MBS Stay Bid
The 2yr Treasury Auction was every bit the non-event we've come to expect since the Fed made the issue irrelevant with the changes to policy verbiage in August, 2011. Markets continue to bide their time and just happen to be doing so in a moderately friendly way for bond markets. Fannie 3.0's have held on to the 3-5 ticks of gains on the day, but aren't looking keen on going much higher in the afternoon. Additionally, we've seen the first bit of resistance in the mid 1.62's in 10yr yields.
Despite the resistance to further gains seen so far, there's no material resistance toward drifting into slightly better territory. Both 10yr Treasuries and MBS are at or near their best levels of the session. Volume has been waning in the PM hours, leaving us somewhat vulnerable to bigger swings into the close. That said, "bigger swings" relative to the narrowness of the day's existing range still wouldn't be very big. Bond markets look like they're on cruise control.
Despite the resistance to further gains seen so far, there's no material resistance toward drifting into slightly better territory. Both 10yr Treasuries and MBS are at or near their best levels of the session. Volume has been waning in the PM hours, leaving us somewhat vulnerable to bigger swings into the close. That said, "bigger swings" relative to the narrowness of the day's existing range still wouldn't be very big. Bond markets look like they're on cruise control.
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.
Matthew Graham : "RTRS- K.C. FED AGAIN SOUGHT DISCOUNT RATE HIKE TO 1 PCT, BOSTON FED WANTED CUT TO 0.5 PCT, REMAINING 10 FED BANKS SOUGHT NO CHANGE AT 0.75 PCT "
John Paul Mulchay : "hard to distinguish that, isn't it? Number of accounts in good standing, length of credit history, all contribute to how badly or not the credit is damaged by an 'event'"
Jeff Statz : "either way the CDIA is very mysterious how short sales are conveyed via credit reporting. for instance, go to http://www.cdiaonline.org and search for Short Sale. you get no material findings."
Jeff Statz : "I think we're talking about late payments aside"
John Paul Mulchay : "Short refi isn't usually quite as bad as short sale because to get the new FHA takeout loan, the homeowner has to be current on their mortgage. No missed payments = less credit damage."
Jeff Statz : "i trust this resource: http://bankinganalyticsblog.fico.com/2011/03/research-looks-at-how-mortgage-delinquencies-affect-scores.html"
Jeff Statz : "yeah, it's sort of up to the lender how it reports as there isn't a hard and fast rule about how it's entered in e-oscar. typically, you'll at least get the "paid for less than full balance" which hurts."
Jason York : "i think the same way as a short sale would, but not sure, I guess, like short sales, it depends on how it is reported"
Ryan Kelly : "does anyone know how a short refinance effects credit?"
Brett Boyke : "in my mind the biggest tape bomb for us will be resolution to EU crisis in some definitive form. that could be mid September"
Brett Boyke : "re: QE - we are in a pretty good spot, if there is no QE equities will be disappointed and may sell off and we potentially benefit. If QE is a go, MBS will most likely be a part of the mix"
Matthew Graham : "I rarely forecast or guess where we'll be. Rather, I'd say, and have been saying, it will take some doing to push rates significantly higher or lower before the bigger-ticket events beginning Friday. Thinking about it logically, it doesn't make much sense to go too far in either direction because no one would really want to be on the wrong side of the potentially big directional move."
Justin Harward : "I'm somewhat conflicted though. For the conservative in me I don't want QE3 but for the loans that are floating, I want lower rates ;)"
Justin Harward : "that's my guess"
Ryan Kelly : "MG, sideways till friday your guess?"
Matthew Graham : "prelude to FOMC 9/13 perhaps, clarification on how Fed's digesting info since last meeting and 8/1 minutes"
Justin Harward : "oh? I thought that was the whole point of his press conf?"
Victor Burek : "he wouldnt announce that at jackson hole"
Justin Harward : "so if big ben says no qe3 on friday, how much do you think rates will move up?"
Paul Carlin : "I got a payment history from the client. He printed it out from the Wells site. I faxed this to my credit provider. They added it to my report. I am sure it was only on the report I have. If I pulled again, it would not be there as the big three do not have a data dump from wells with any history. "
Amy : "In my case, Wells won't reaffirm, they told her it's been too long since her BK, which makes no sense? "
Jason Harris : "Joe....I think it will need to be re-affirmed...I had a customer get it done on an old BK recently. took a couple weeks. Their BK attorney handled it"
Kent Mikkola #353976 : "I'll let you know if we have any luck"
Joe Bydzovsky : "kent, is your borrower in woodbury by chance? "
Joe Bydzovsky : "they do not have a second.. only a first with Wells right now"
Paul Carlin : "I have and FHA stream like that. The first was not on credit, we got it on credit and then title asked us about the second, what were we going to do about it. I did not know about the second. Because of the BK, both were not on credit. I asked the client why he did not tell us about the second and he said we did not need to know, as we were only refinancing the second. Palm to forhead!"
Tom Bartlett : "It would be nice to see this area taken out convincingly (MBS)"
Kent Mikkola #353976 : "We have a client in that situation with a 2nd from TCF... just seeing if it is the same customer lol"
Kent Mikkola #353976 : "Joe.. do they have a 2nd mtg from TCF?"
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