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Mortgage News Daily combines the expertise of some of the housing industry's leading minds with the power of social media to offer an always lively, constantly evolving web community. MND communicates breaking news, streams video, and provides expert opinion and commentary to a community of interested market professionals and curious consumers.Economic Uncertainties and Technical Factors Help Rates Extend Rally
- "Rate sheet influential MBS bid higher but lagging benchmarks greatly
- Stock Lever's influence is obvious
- Economic uncertainties and technical resistance keep stocks grounded
- S&P futures -20.50 art 1178. Range bound for most part
- Dollar Index: +.846 at 83.118
- NYMEX Crude: -2.35 at 83.84
Good Morning All.
While Japan is out until Thursday, China and London began their work week by selling stocks and buying dollar denominated U.S. Treasuries last night. The HANG SENG was down 0.23%, the SHANGHAI Composite was 1.23% lower, the CAC in Paris is off 2.29%, the DAX in Germany is 1.83% in the red, and the FTSE in London is 1.61% underwater.
The stock lever's influence on interest rates is obvious...stocks down, interest rate prices up.
[Image or graph removed from email. View full article with images]
WHY????
A confluence of logic. The Euro is at a one year low....I am sticking to my "rush to buy dollar denominated assets" theory. Not to mention we have long targeted 1200 on the S&P as a "STATUS QUO" level for stocks. After crossing over this key pivot we feel stocks will need concrete proof of structural improvements in the labor market in order to extend the 14 month rally (Friday is NonFarm Payrolls). More than anything it is an abundance of uncertainty combined with a technical bias that leans toward re-evaluating the macro (and micro) environment at S&P 1200. This is textbook range bound behavior...
[Image or graph removed from email. View full article with images]
High volume support levels (where much of the buy/sell action took place recently) have held up and the 10 year note has broken through key retracement resistance this morning.
[Image or graph removed from email. View full article with images]
When zoomed out, you can see that the benchmark 10 year TSY note has extended its originator friendly trend channel. The RED portion of the line represents price action today.
[Image or graph removed from email. View full article with images]
Rate sheet influential MBS prices are improved but getting punished when compared to positive progress in benchmarks. Higher dollar prices are not our friend at the moment. The FN 4.5 is +0-07 At 100-28 yielding 4.403%. Remember 100-28 has served as a key pivot for the FN 4.5 in 2010.
[Image or graph removed from email. View full article with images]
The secondary market current coupon is 4.373%. The current coupon yield is MUCH WIDER vs. 10yr yields. Here is my scorecard:
[Image or graph removed from email. View full article with images]
REPRICES FOR THE BETTER WILL BE BAKED IN
REPRICES FOR THE WORSE AROUND 100-18
NEXT EVENT: PENDING HOME SALES AND FACTORY ORDERS AT 10AM. On Capitol Hill, the U.S. Senate will cast its first votes on the nearly 1,600 page Wall Street reform bill. READ MORE
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YOUR MESSAGE HERE
Economic Uncertainties and Technical Factors Help Rates Extend Rally
- "Rate sheet influential MBS bid higher but lagging benchmarks greatly
- Stock Lever's influence is obvious
- Economic uncertainties and technical resistance keep stocks grounded
- S&P futures -20.50 art 1178. Range bound for most part
- Dollar Index: +.846 at 83.118
- NYMEX Crude: -2.35 at 83.84
Good Morning All.
While Japan is out until Thursday, China and London began their work week by selling stocks and buying dollar denominated U.S. Treasuries last night. The HANG SENG was down 0.23%, the SHANGHAI Composite was 1.23% lower, the CAC in Paris is off 2.29%, the DAX in Germany is 1.83% in the red, and the FTSE in London is 1.61% underwater.
The stock lever's influence on interest rates is obvious...stocks down, interest rate prices up.
WHY????
A confluence of logic. The Euro is at a one year low....I am sticking to my "rush to buy dollar denominated assets" theory. Not to mention we have long targeted 1200 on the S&P as a "STATUS QUO" level for stocks. After crossing over this key pivot we feel stocks will need concrete proof of structural improvements in the labor market in order to extend the 14 month rally (Friday is NonFarm Payrolls). More than anything it is an abundance of uncertainty combined with a technical bias that leans toward re-evaluating the macro (and micro) environment at S&P 1200. This is textbook range bound behavior...
High volume support levels (where much of the buy/sell action took place recently) have held up and the 10 year note has broken through key retracement resistance this morning.
When zoomed out, you can see that the benchmark 10 year TSY note has extended its originator friendly trend channel. The RED portion of the line represents price action today.
Rate sheet influential MBS prices are improved but getting punished when compared to positive progress in benchmarks. Higher dollar prices are not our friend at the moment. The FN 4.5 is +0-07 At 100-28 yielding 4.403%. Remember 100-28 has served as a key pivot for the FN 4.5 in 2010.
The secondary market current coupon is 4.373%. The current coupon yield is MUCH WIDER vs. 10yr yields. Here is my scorecard:
REPRICES FOR THE BETTER WILL BE BAKED IN
REPRICES FOR THE WORSE AROUND 100-18
NEXT EVENT: PENDING HOME SALES AND FACTORY ORDERS AT 10AM. On Capitol Hill, the U.S. Senate will cast its first votes on the nearly 1,600 page Wall Street reform bill. READ MORE
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