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Auction Provides Small Boost For MBS. Too Little Too Late?
Posted to: Micro News
Wednesday, November 28, 2012 1:21 PM

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The 5yr Treasury Auction came in better-than-expected with a 0.641 stopping yield versus a 0.649 "when-issued" yield at 1pm. (more on Treasury auction terminology). The bid-to-cover, at 2.89, was similarly stronger than the recent average of 2.86.

Bond markets initially rallied after the results but gains were limited. 10yr yields fell less than 2bps and MBS rose a scant 2 ticks before hitting their head on the same levels that provided a floor heading into the auction. For now, the short term resistance is clearly the 105-06 area for Fannie 3.0s. This lines up well with broader bond market currents which have a resistance level of 1.6147 in terms of 10yr yields.

In other words, "too little too late" is indeed the way things are going for now, and that assessment changes when the aforementioned resistance levels are breached. Fannie 3.0s are currently very close though, at 105-05 and 10yr yields are right on the 1.6147 line as well. Still anyone's game.

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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)
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  • 30YR FNMA 5.0 110-17 (-0-04)
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  • 30YR FNMA 5.5 111-30 (0-02)
Recent Housing Data:
  • Mortgage Apps 10.03%
  • |
  • Refinance Index 11.33%
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  • Purchase Index 8.43%