Bond markets got the 3yr Treasury auction out of the way today. While it was noticeably positive for Treasuries, it was the least potent of the 3 in terms of market movement potential. 10's and 30's are yet to come in the next two days. Along with big corporate bond issuance, this available supply is part of the rationale for the current level of hesitation in bonds, but probably not the biggest part.
There's a two way race for the biggest contributor to that hesitation. It's between Europe and the technical realities of the recent rally. Those realities are quite simply refer to trading levels having become overheated in January, relative to the pace set during 2014. In other words, rates fell quickly and could simply be moderating.
The European considerations include the upcoming 2 days of meetings, first with the Eurogroup tomorrow and then a full EU Summit on Thursday. The only important thing to know about these meetings is that they could yield a more concrete conclusion on the Greece situation. Please note: at this point, the biggest risk we face is that there's some magical happy ending for Greece and the EU, especially one that includes ECB bond buying. That would seriously damage the gloomy long term outlook for Europe--something to which we owe a good amount of domestic bond market positivity.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom.
Real time pricing is available via MBS Live.
| MBS | FNMA 3.0 101-30 : -0-04 | FNMA 3.5 104-28 : -0-04 | FNMA 4.0 106-31 : +0-01 |
| Treasuries | 2 YR 0.6560 : +0.0040 | 10 YR 2.0040 : +0.0260 | 30 YR 2.5820 : +0.0320 |
| Pricing as of 2/10/15 5:29PMEST |
Today's Reprice Alerts and Updates
3:44PM : ALERT ISSUED: Negative Reprice Risk Persists as MBS hit Lows
12:28PM : ALERT ISSUED: Negative Reprice Risk Debuts as Stock Lever Twists
9:21AM : Bonds Lose Ground Overnight Because Europe is Gullible
MBS Live Chat Highlights
Gus Floropoulos : "until the c corp returns are filed, my guess no dice"
Gus Floropoulos : "underwriter discretion. I think typically the 2014 w2 will only be used as an indicator that his wages are inline "
Scott Valins : "hey guys - client is 60% owner of a c-corp. If he files his personal returns for 2014 but not his biz returns yet can I give him his 2014 w-2 salary from the biz while still using his 2013 biz income? I have P&Ls to show the biz income was higher in 2014"
Matthew Graham : "In that regard, my leaning (obviously based on the charts this morning in the Day Ahead) is that Europe isn't done moving lower in yields. I think we can hope for that to be the case and simply stay sensitive to the lines in the sand that would suggest a more defensive strategy. 2.04-2.07 would be the next biggie. "
Matthew Graham : "Complicated question. I think that has been an opportunity for the bond market since April 2014. The question is when it starts to level-off and turn around--if it does at all. "
Dan Ramirez : "MG - do you see the Greek and EU issues as a opportunity for the Bond market? what other factors can help us anticipate the volatility swings up and down? thx "
Matthew Graham : "NT, headlines should be concentrated before rate sheet time. "
Noah Thompson : "MG - Will the news from the EU and Greece meeting be out before US markets open tomorrow or will it come later in the day? "
Matthew Graham : "RTRS- U.S. 3-YEAR NOTES BID-TO-COVER RATIO 3.34, NON-COMP BIDS $61.95 MLN"
Matthew Graham : "RTRS- U.S. SELLS $24 BLN 3-YEAR NOTES AT HIGH YIELD 1.050 PCT, AWARDS 81.56 PCT OF BIDS AT HIGH"
Matthew Graham : "there's no bias in either direction for 30yr auction. If there was, markets would price it in ahead of time. There does, however, tend to be a slight bias in general, toward "defense" ahead of auctions, which can occasionally result in extra strength after the auction cycle. That strength, of course, is relative to whatever other forces are acting on bond markets at the time. So if it's not enough to offset a separate dose of weakness, it wouldn't really be observable as strength, even if it was still there."
Matt Hodges : "what is normal is concession selling into treasuries - 30 or 10 and then some knee jerk movement at 1pm announcement of auction results followed by more trading."
Brian Weatherill : "Its my assumption that Thursday's going to be a bad day, is it normal for yield to rise during a t30 sale?"
Mike Drews : "I was hoping for some support here"
John Paul Mulchay : "Hoping this is the pain before the gain"
| Economic Calendar |
| Time | Event | Period | Actual | Forecast | Prior | | Wednesday, Feb 11 | | 0:00 | Roll Date - Fannie Mae 30YR, Freddie Mac 30YR * | | | | | |
MBS Market Alerts
