Phew.

We made it through yesterday afternoon. And then we made it all the way through today! Rally intact!! Additional gains secured!!! Reprices for the better awarded!!!! REPEATEDLY!!!!!

IT FEELS GREAT TO GO INTO THE WEEKEND ON A HIGH NOTE DOESN'T IT?

Oh wait. wait. wait.wait....

I misspoke. Not a high note. But close to one! I circled the weekly high. It was on Monday. That feels like forever ago to me though. Oh. That's probably because parnertia pulled the FNCL 4.5 underwater yesterday morning and the best execution 30 year fixed mortgage rate touched 5.25%. Ugghghghhh....gives me the heebie jeebies just thinking about how fast we went from 4.00% to 5.25%. Don't ever ever forget this experience. Loan pricing CLEARLY worsens much faster than it improves....

Remember this post: Bargain Buyers Missing from Bond Market. Rates Off to Rough Start  ???

It was obvious out the gate on Monday morning. There was no bid for the long end of the curve. Sellers dropped their offer prices over and over just to get a few nibbles. Then the duration shedding started up again. Then the snowballing. Then fast$ got on board and then we broke 3.50%.

That was a low point for me. I felt emotionally violated by the so called "vigilantes" (fast$inlackofliquidity). That sorta reflected the sentiment of the market too. Bombed out and depleted. Exhausted. Beat down. Worse than this: "YEH HE WAS PRETTY OLD"

Yeh. That was a low point.

But then all of a sudden it was like someone or someaccount stood up and said NO MORE! No more of this nonsense. These yields are too compelling! And they led a charge. So on the heels of short covering we picked ourselves up off the ground and put our fists back up to protect our pride. PRAISE THE HEAVENS!!! Someone waved in a bid!!!!!

It seems like bond market may have had enough. Even  if we did rally in a VERY LOW VOLUME trading environment. We'll take it. Gotta start somewhere. Even if there's still a herd of short positions left to cover. We can wash them out. "Vigilantes"? Who?

We'll take it. Gotta start somewhere....

Here is a screen shot of your two day MBS price reversal.

So two days of improvement puts loan pricing in a slightly better spot than it was on Wednesday, but not as "strong" as Tuesday morning. Haha wow. Seriously. Doesn't that feel like forever ago? I guess that'll happen when you see 250bps disappear and reappear in a two day time frame. Plus the other 400bps that went "POOF" after the all-time high on November 4th.

That really is a sobering statement. Nearly 700bps in rebate wiped clean 45 days.  Well we gotta start the recovery process somewhere....

December floaters shouldn't be comfortable yet though. You should actually be pretty antsy. That's how the market will behave next week at least. The week ahead will be defined by Christmas parties, hangover headaches, out of office replies and a straight up lack of trading liquidity (can it dry up anymore???) That means the potential for price chopatility is high.

Now. That isn't necessarily a bad thing. Volatility was very friendly to our cause today. But December floaters should still be pretty antsy. Especially if 4.75% is on the table. 4.75% is good stuff right now. Even if rates do rally next week, it's year end for lenders too. They probably won't get too aggressive with 4.0 MBS coupons. Not with February FNCL 4.0s indicated at 98-13. Thus the Fannie 4.5 is expected hold the production coupon title belt at least into the early part of the new year. That means lenders will probably draw a line in the sand at 4.75% (via expensive permanent rate buydowns).

Plain and Simple: Read that Last Paragraph Again!

We started letting War Roomers into MBSonMND today. So far so good! If you signed up to be a beta tester, be patient with us, your invitation is coming. All is going well so far though. We are extremely excited to finally release this project!