Ok, I suppose we have to capitulate to some extent...
It's not out of the realm of possibilities to see a few of the more "jumpy" lenders take a few bps of YSP away based on the 8 tick drop that just occurred in the FN 4.5. Given the BIG PICTURE backdrop against much of our recent analysis has been framed, we are feeling more confident that prices are likely to remain near the recent range's high side. Below is the downward spike that might cause some drama in the secondary department,....as many are well aware....certain "price-leader" type lenders might have already jumped the gun.
Profit taking is naturally a concern once we're meaningfully over par, but to expect losses to continue after a PAR (ish) level has been reached is a bit overzealous considering the bigger picture. Our biggest worry: profit taking in an illiquid summer afternoon. However if TSYs manage to hold near 3.55% we wouldnt expect much drama heading into the close.
All in all, PAR-nertia is a likely the most powerful force bringing down prices today...
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