The day ahead promises to be busy. At 10am we get New Home Sales, then at 1pm the Treasury will release auction results on a $42 billion 5year note offering. After that the FOMC will release their policy statement at 215pm. Many mortgage market watchers are hopefully waiting for an update on the fate of the MBS purchase program...we are not holding our breath. In between all these events I will be tuned into CSPAN to watch Treasury Secretary TIMMMMAAAYY!!! get poked and prodded by members of the Housing Oversight Committee. Also testifying are former Treasury Secretary Hank Paulson, former New York Fed Chairman Stephen Friedman, and TARP Inspector General Neil Barofsky. Good luck fellas, I recommend wearing a jock strap and cup....backwards.
re: an update on the fate of the MBS purchase program....I just finished writing on the relationship between flailing demand for mortgage loans and the Fed's intentions to exit the agency MBS market at the end of Q1 2010. I doubt you will be too appreciative of my perspecitve but HERE IT IS anyway.
I am going to keep this short and sweet so I can try and stay on schedule today.
Benchmark TSYs didn't venture too far from the 3.62% pivot overnight. Trading volume continues to be thin as market participants await the 215pm FOMC statement release. The 3.375% coupon bearing 10 year TSY note is +0-04 at 98-04 yielding 3.603%.
In the agency MBS market, "rate sheet influential" coupon prices are marginally improved, but off the highs of the day. Trading flows are generally slow but we have seen a few spurts of buying activity here and there (CMO deal bid). The FN 4.0 is +0-02 at 98 the dollar yielding 4.192% and the FN 4.5 is +0-02 at 101-01 yielding 4.395%. The secondary market current coupon is 4.365%. The current coupon yield is 76bps over the 10yr TSY note yield and 63bps over the 10yr swap rate.
NEXT EVENT: New Home Sales at 10am. After falling 11.3% last month, economists are expecting an improvement from 355,000 annual sales to 370,000 annual sales.
MBS Market Alerts
