MBS Live: MBS Afternoon Market Summary
The title of todays' recap, "narrowest trading range in 6 months," is the only thing interesting about today. Even on the approach, there was nothing that stood out in terms of market-moving potential. The bigger-picture themes regarding a potential shift in the Fed's threshold policy have the burden of proof. Such themes weren't reflected in today's essentially data-free trading and thus we care about them less.
Left to their own devices, trading levels muddled sideways with MBS holding their narrowed range since May 13th, righ in line with yesterday's post-ISM levels. Prices were technically an eighth to a quarter of a point higher, but only when compared to a rather "pouty" afternoon yesterday. The truer sideways vibe is reflected in the average rate sheet, which is right in line with yesterday.
We can always assume that Friday's jobs report (NFP) will be a relevant consideration for bond markets. Only problem is that tomorrow is Thursday. Whether or not GDP steps up to the plate remains to be seen, but it's certainly not something you'd want to rule out. NFP still matters more, but GDP matters. Be aware that if GDP or NFP manage to come in above consensus or worse yet--above their previous readings, the damage would likely be swift and severe for bond markets.
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.
12:02PM :
MBS Near Highs; Weighing Reprice Potential
As far as "positive progress" is concerned, the 2.67 technical level has held up quite well yesterday and early this morning. This isn't readily apparent on the dashboard charts because the bounce happened in overnight trading, but what is apparent is that 10yr yields have made successively "lower highs."
They also made a "lower low" into 11:45am, and in so doing, continue to break away from the influences of the stock lever. In short, 10's are trending lower in yield so far today. MBS are following. Fannie 3.5s are up 7 ticks at 101-29, capturing back some of yesterday's post-data weakness.
Whether or not this will result in positive reprices depends heavily on the lender. It's not out of the question for the more aggressive minority, but only among lenders who reprice based on stability and trend rather than outright gains (because we don't have enough by way of outright gains to justify reprices yet).
That said, we're heading in the right direction. The longer we hold current levels, the more likely the "stability reprice" crowd might perk up, and if we gain a few more ticks, others would take note as well.
They also made a "lower low" into 11:45am, and in so doing, continue to break away from the influences of the stock lever. In short, 10's are trending lower in yield so far today. MBS are following. Fannie 3.5s are up 7 ticks at 101-29, capturing back some of yesterday's post-data weakness.
Whether or not this will result in positive reprices depends heavily on the lender. It's not out of the question for the more aggressive minority, but only among lenders who reprice based on stability and trend rather than outright gains (because we don't have enough by way of outright gains to justify reprices yet).
That said, we're heading in the right direction. The longer we hold current levels, the more likely the "stability reprice" crowd might perk up, and if we gain a few more ticks, others would take note as well.
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- FED'S PIANALTO SAYS HOPES ECONOMY ACCELERATES ENOUGH TO PROMPT REDUCTION IN BOND BUYING "
Matthew Graham : "RTRS - FED'S PIANALTO: WHEN QE IS SLOWED AND EVENTUALLY STOPPED, ACCOMMODATION WILL STILL BE NEEDED "
Matthew Graham : "RTRS- U.S. FED'S PIANALTO: NEED TO BE CAUTIOUS IN EXPANSION OF ASSET PURCHASES "
Joe Daquino : "Well, I am a realist. I don't expect too much out of it, given a miss, but would like to avoid a face melter!!"
Matthew Graham : "probably avert, but not sure how far it would move us in the other direction. "
Joe Daquino : "Understandable, but if we miss at sub 100K, would that at least help us avert a sell off?"
Matthew Graham : "sub 100k, historically, would not be a big miss at all. It's entirely possible"
Victor Burek : "from Gallup, In a month when government workers at all levels reported less hiring at their workplaces, Gallup's Job Creation Index dipped slightly in October to +19, the first time since April the index has registered below plus 21. From a longer-term perspective, the index in October is similar to its 2012 average and remains higher than the depressed levels seen from the second half of 2008 through 2011.
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Joe Daquino : "Local AM station in Los Angeles / Orange County is predicting a sub 100K number on Friday."
Justin Harward : "looks like a day of sideways/holding pattern until GDP tomorrow and NFP on friday"
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