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Bond Markets In Slightly Stronger Territory. MBS Drop Due To Roll
Posted to: Micro News
Tuesday, November 13, 2012 9:42 AM

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For anyone with customized reprice alert settings, this morning's "MBS Have Moved DOWN" alert was due to the roll from November coupons to December in Fannie/Freddie 30yr Fixed MBS. Factoring out that artificial adjustment, Fannie 3.0s are up 4 ticks currently after opening up 2 ticks in the red.

Treasuries were broadly improved throughout the overnight session as weak German data and a clash between the IMF and EU over Greek bailout plans fueled a general "risk-off" trade. Shortly before the US open, news hit that Germany wants to "bundle three Greek aid tranches into a single payment of more than €44 bln" according to a Reuters wire citing German government sources. This sent German Bunds sharply, but temporarily higher in yield, along with US Treasuries.

The sell-off was very fast, but very small and short-lived as early domestic trading helped the bounce back. We can also only imagine that markets have generally had their fill of ostensibly positive headlines concerning Greece's bailouts, austerity, and fiscal restructuring.

Whatever the case, the flow of risk-on vs risk-off looks to have swung back in the favor of fixed-income heading into the cash stock market open. With no scheduled data on tap apart from the 2pm Federal Budget, we could see a fair bit of connection between stocks and bonds today.

That said, a small, early rally in stocks at the 9:30am open has thus far failed to stir Treasuries and MBS to noticeably weaker levels. Fannie 3.0s are currently holding their 4 tick improvement while 10yr yields remain in the mid 1.58's.

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Mortgage Rates:
  • 30 Yr FRM 3.64%
  • |
  • 15 Yr FRM 2.93%
  • |
  • Jumbo 30 Year Fixed 3.60%
MBS Prices:
  • 30YR FNMA 4.5 108-30 (-0-02)
  • |
  • 30YR FNMA 5.0 110-22 (0-03)
  • |
  • 30YR FNMA 5.5 111-28 (0-00)
Recent Housing Data:
  • Mortgage Apps 10.03%
  • |
  • Refinance Index 11.33%
  • |
  • Purchase Index 8.43%