Well..overall not much MBS reaction to that speech....President Obama continues to use his rhetorical skill set to lead taxpayers across an economic "doom and gloom" tight rope. In a speech titled "A New Foundation" President Obama outlined " what we've done, why we've done it, and what we have left to do".
He indicated that the "Recovery Act, the bank capitalization program, the housing plan, the strengthening of the non-bank credit market, the auto plan, and our work at the G20" have helped "generate signs of economic progress". He did however tafg his comments with the disclaimer that this "does not mean that hard times are over" but "for the very first time, we are beginning to see glimmers of hope".
President Obama was more of a cheerleader for the average Joe taxpayer...Wall Street heard much of the same rhetoric they've heard already in the past. So...the Dow has sold off!
In a relatively quiet trading session thus far the MBS stack continues to bounce around in a tight range within its own little insulated corner of the market. Since hitting intraday highs mortgages have consolidated gains and are once again retesting upper resistance levels. A nice intraday upward trend has formed which gives us an idea of short term support levels. If the yield curve flattening induced upward MBS price trend were to continue the FN 4.0 will need to hold levels near 100-02.
"Up in coupon" MBS has outperformed your rate sheet influential MBS coupons as most mortgage market participants continue to take advantage of the opportunity to day trade shorter duration fixed income cash flows while the Federal Reserve provides support and liquidity to mortgage bankers looking to unload supply of new loans. Production(rate sheet) MBS/TSY yield spreads have continued to slowly gap out (TSY outperforming MBS) as the long end of yield curve steadily flattens. Remember: longer maturity TSY are used to determine the relative value (yield spreads) of production MBS. "Up in Coupon" MBS/TSY yield spreads are flat to slightly wider depending on prepayment assumptions (duration assumptions).
Since 5pm "Going Out" Marks....
FN30_______________________________
FN 4.0 -------->>>> +0-06 to 100-03 from 99-29
FN 4.5 -------->>>> +0-05 to 102-00 from 101-26
FN 5.0 -------->>>> +0-04 to 103-08 from 103-04
FN 5.5 -------->>>> +0-02 to 104-03 from 104-01
FN 6.0 -------->>>> +0-02 to 104-27 from 104-25
GN30________________________________
GN 4.0 -------->>>> +0-05 to 100-10 from 100-05
GN 4.5 -------->>>> +0-05 to 102-07 from 102-02
GN 5.0 -------->>>> +0-02 to 103-26 from 103-24
GN 5.5 -------->>>> +0-03 to 104-13 from 104-10
GN 6.0 -------->>>> +0-03 to 104-25 from 104-22
UST2YR Yield: -0.036 to 0.8427
UST3YR Yield: -0.056 to 1.2181
UST5YR Yield: -0.086 to 1.7268
UST10YR Yield: -0.073 to 2.7900
UST30YR Yield: -0.053 to 3.6651
Dow: -145.04 to 7912.77
Ben Bernanke to speak at 130...HERE is the prepared text he will read. markets have already baked in Bernanke's "glimmers of hope" but will be intently listening for forward looking comments made during the Q&A session
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