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Bond Markets Roughly Unchanged After Greek Deal, AM Data
Posted to: Micro News
Tuesday, November 27, 2012 9:33 AM

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As we perused headlines about Greece's debt deal last night and this morning, we were struck by the lack of attention paid to the fact that the supposed December 13th bailout payment is far from a done deal and remains contingent on the parliamentary approval by Eurozone member states. Sarcastically, The Day Ahead this morning mentioned that "member states" = "Germany," and no sooner have domestic markets begun their trading day than we're already seeing headlines from German officials offering up reasons for delay and/or rejection of the current form of the bailout agreement.

Even if most news outlets failed to hone in on that critical issue ahead of time, markets did not. While German Bunds began their day in much higher territory, at least half of their move higher was implied by late action in US Treasuries and the other half was almost immediately unwound. Both Bunds and TSYs rallied roughly 4bps lower from 2am to 5:30am. That was essentially a push back against the "risk-on" suggestion of the debt deal and those 4 bps were as much as bond markets got before again moving slightly higher in yield.

Despite the healthy ebbs and flows, overnight yield highs held just before and after the domestic open with 10's going no higher than 1.675. MBS opened up a tick or two weaker but have generally held their ground perfectly within the high end of yesterday's range, finding support at yesterday afternoon's lows (104-26 in Fannie 3.0s). Stock futures climbed in the overnight session but are now back underneath yesterday's 4pm levels as the domestic cash open approaches.

Stateside economic data this morning has largely been a non-event. While there was a brief gyration following the better-than-expected Durable Goods report, it was mostly brief and not too much of a gyration. A few fence-sitters took note of the ground-holding and brought both Treasuries and MBS quickly back to their best levels of the morning. Case-Shiller Home Price data isn't typically much of a market mover, and came in as-expected this time anyway, leaving it almost completely off the radar for market moving guidance this morning.

Stocks and bonds have been reasonably well connected, so we'll observe that potential ongoing correlation as we await Consumer Confidence data at 10am and another round of Fed "Twist" buying at 10:15am. Fannie 3.0s are currently up 3 ticks on the day at 104-31 and 10yr yields are down just under 1 bp at 1.659

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Mortgage Rates:
  • 30 Yr FRM 3.67%
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  • 15 Yr FRM 2.95%
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  • Jumbo 30 Year Fixed 3.62%
MBS Prices:
  • 30YR FNMA 4.5 108-28 (0-00)
  • |
  • 30YR FNMA 5.0 110-17 (-0-04)
  • |
  • 30YR FNMA 5.5 111-30 (0-02)
Recent Housing Data:
  • Mortgage Apps 10.03%
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  • Refinance Index 11.33%
  • |
  • Purchase Index 8.43%