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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.Fed Leaves Door Open to Buy More MBS if Needed
Production MBS coupon prices hit new record highs yesterday, pushing mortgage rates through the 4.25% barrier to new lows. "Rate sheet influential" MBS coupons were led higher by longer dated Treasuries,
which benefitted from month-end allocations and a continued correction
from the sell off seen last Friday. The new all-time price high for the front month FNCL 4.0's is
103-19. The October delivery FNCL 4.0 went out +0-10 at 103-07. Yield
spreads ended the session wider (nominally) vs. duration adjusted
benchmarks. The 10 yr note went out +0-17 at 101-12 yielding 2.47% (-6bps). The 2s/10s curve bull flattened back down to 200bps. It should be noted that Treasuries rallied regardless of a modest bid for equities. The S&P closed +0.03% at 1049.27.
A hint of better pricing to come was offered by lenders on Monday when lock desks were observed buying back some of their hedges to get out in front of an expected uptick in pipeline fall out. READ MORE
MBS valuations were also given a boost when the FOMC Minutes revealed the Fed had discussed the notion of reinvesting MBS prepays back into the TBA MBS market.
From the FOMC Minutes: "While reinvesting in Treasury securities was seen as preferable given current market conditions, reinvesting in MBS might become desirable if conditions were to change."
This debate is getting very old. One trader compared the situation to Brett Favre's retirement process. That's an accurate assessment if you ask me, the only difference is the Vikings need Brett Farve and the MBS market is doing just fine without the Fed's funding efforts (besides ZIRP). Things could change though and the Fed has made it very clear that they stand at the ready to act if conditions worsen. Thus it is not surprising to see the Fed leave the option on the table...just in case they need a trump card down the road. Put it in the back of your mind for now...if it becomes a pressing issue again, we will revist.
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This email was sent to you by:
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Message:
YOUR MESSAGE HERE
Fed Leaves Door Open to Buy More MBS if Needed
Production MBS coupon prices hit new record highs yesterday, pushing mortgage rates through the 4.25% barrier to new lows. "Rate sheet influential" MBS coupons were led higher by longer dated Treasuries,
which benefitted from month-end allocations and a continued correction
from the sell off seen last Friday. The new all-time price high for the front month FNCL 4.0's is
103-19. The October delivery FNCL 4.0 went out +0-10 at 103-07. Yield
spreads ended the session wider (nominally) vs. duration adjusted
benchmarks. The 10 yr note went out +0-17 at 101-12 yielding 2.47% (-6bps). The 2s/10s curve bull flattened back down to 200bps. It should be noted that Treasuries rallied regardless of a modest bid for equities. The S&P closed +0.03% at 1049.27.
A hint of better pricing to come was offered by lenders on Monday when lock desks were observed buying back some of their hedges to get out in front of an expected uptick in pipeline fall out. READ MORE
MBS valuations were also given a boost when the FOMC Minutes revealed the Fed had discussed the notion of reinvesting MBS prepays back into the TBA MBS market.
From the FOMC Minutes: "While reinvesting in Treasury securities was seen as preferable given current market conditions, reinvesting in MBS might become desirable if conditions were to change."
This debate is getting very old. One trader compared the situation to Brett Favre's retirement process. That's an accurate assessment if you ask me, the only difference is the Vikings need Brett Farve and the MBS market is doing just fine without the Fed's funding efforts (besides ZIRP). Things could change though and the Fed has made it very clear that they stand at the ready to act if conditions worsen. Thus it is not surprising to see the Fed leave the option on the table...just in case they need a trump card down the road. Put it in the back of your mind for now...if it becomes a pressing issue again, we will revist.
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