The charts tell the same story that we set up for this AM in that the early data had little to no impact on trading action with auction providing the true impetus for movement on the day. A lack of acknowledgement from prices is readily understood when we see that they completely ignored better than expected data and kept grinding into a narrower range--virtually honing in almost exactly on PAR. After the auction, it's a different story. As opposed to a narrowing range with a series of lower highs and higher lows, we see a decided move up with higher highs and higher lows, the entire affair at a much steeper angle of attack than previous directionality. As we approach the last hour of trade, we're nearing the band of price levels that marked the upper limits of last week's very prominent range. All of the preceding graphically represented here:
When I get the closing commentary out to you, I'm likely to provide the same sentiments as last week in that it's safer to bet with the trends in range than against them, until the range is meaningfully broken by a meaningful margin for a meaningful amount of time. So between now and then, be on the lookout for lenders passing on rates that are similar to those seen at the end of day on the 20th or any early morning rate sheets you may have received before prices tanked on the 21st. Basically, you're looking for your single best rate sheet last week. If this afternoon's reprices for the better get you into the same ballpark, it's once again time to consider the market's recent unwillingness to push higher. Could it though? Sure, why not... But locking, like investing, is about managing risk and uncertainty with available tools and knowledge. So if your available knowledge from last week says the safer bet in terms of pipeline allocation is to weight your decisions for the range holding as opposed to being broken, I know at least one available tool that would agree with you and I'll be here all week.
MBS Market Alerts
