Good Morning All. Time for the children to return to school and for parents to refocus on one of those four letter words...WORK!!!
Just in case you missed it...yesterday one reader (it was Edgar!) asked us what the prospects were for Fannie Mae getting into the Warehouse Lending Business....
Here is an appropriate answer from Tim Rood, a former Fannie Mae Executive and friend of the blog....
"I think GNMA would be a more likely and logical candidate for either funding, or more likely guaranteeing, warehouse funds for bankers. Fannie Mae is challenged by:
1) Charter issues (warehouse lending is too close to the primary market)
2) strategic issues (strategic goals are essentially established by FHFA, and their long term objectives appear biased towards reducing reliance on the GSEs), and
3) they have lack operational capacity to take it on w/o a mandate, and funding, from FHFA...not to mention it wouldn't appear that they have the balance sheet to guarantee the lines."
Doesnt that sound better than giving a dying government sponsored agency more responsibilities?
PPI and retail sales were just released. Economists were expecting PPI to be mostly unchanged month over month....when the news ran across terminal screens market participants were surprised to see producer price inflation had fallen 1.2%. Retail Sales also unexpectedly fell in March (-1.1% vs. +0.30% in Feb).
Prior to the data release MBS and TSY yields were moving higher (bids lower).After the release, fixed income investor's inflationary anxieties diminished and stock investor's consumer spending angst intensified ...TSY/MBS benefited from both...and yields moved lower a few bps.Since then markets have reconsidered the significance of the backward looking economic data vs. the opportunity cost of not taking advantage of a fast money move in earnings sensitive stocks.
At the moment MBS are mostly flat while TSY yields continue to move marginally lower. MBS/TSY yield spreads are wider (MBS weaker in relative value terms). MBS investors view weaker MBS as a buying opportunity but will be hesitant given the expensive dollar prices of day trading MBS coupons (6.0s and 5.5s)...if money flows from stocks to bonds and TSY yields move lower...MBS should however close the spread gap and improve a few more ticks in dollar terms (bids move higher). The stack is still isolated from broad market flows out of flight to safety but will continue to take its directional guidance from the sentiments of stock traders and "flight to safety" flows.
Since 5pm "Going Out" Marks....
FN30_______________________________
FN 4.0 -------->>>> -0-02 to 99-27 from 99-29
FN 4.5 -------->>>> -0-01 to 101-25 from 101-26
FN 5.0 -------->>>> +0-01 to 103-05 from 103-04
FN 5.5 -------->>>> +0-00 to 104-01 from 104-01
FN 6.0 -------->>>> +0-00 to 104-25 from 104-25
GN30________________________________
GN 4.0 -------->>>> +0-01 to 100-06 from 100-05
GN 4.5 -------->>>> +0-02 to 102-04 from 102-02
GN 5.0 -------->>>> +0-03 to 103-27 from 103-24
GN 5.5 -------->>>> +0-01 to 104-11 from 104-10
GN 6.0 -------->>>> +0-02 to 104-24 from 104-22
Check out the MBS market's reaction to the PPI data...hint: its the big upward price spike followed by the slow step down pull back
UST2YR Yield: -0.016 to 0.8629
UST3YR Yield: -0.032 to 1.2419
UST5YR Yield: -0.05 to 1.7632
UST10YR Yield: -0.044 to 2.8193
UST30YR Yield: -0.029 to 3.6882
EFFECTIVE FED FUNDS: -0.02 to 0.13 from 0.15
LIBOR FIXINGS
O/N LIBOR: -0.0100 to 0.2675 from 0.2775
1 MONTH: -0.0169 to 0.4525 from 0.4694
3 MONTH: -0.0275 to 1.1219 from 1.1494
6 MONTH: -0.0431 to 1.6600 from 1.7031
1 YEAR: -0.0494 to 1.9294 from 1.9787
ARE YOU MAD ABOUT GOLDMAN SACHS MAKING A PROFIT????
Dont we want these banks to make money so they are able to raise private capital and resume normal lending practices?
MBS Market Alerts
