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MBS Hit Lows, Early Reprice Risk If We Don't Bounce
Posted to: Micro News
Tuesday, March 05, 2013 10:44 AM
This is a bit of a precarious situation for the earliest pricing lenders of the day. Lenders who put rates out around 9:30am Eastern time, did so during the best levels of the session, when Fannie 3.0s hit 103-18. At 103-13, we're technically at some risk of negative reprices from those lenders.
The caveats are that the earlier highs were fairly "spiky" (more frequently hitting 103-16), and the current dip seems to have found at least short term support. While this is far from being confirmed, it lessens the certainty with which we might expect the "early crowd" to reprice. That said, the risks are already increasing.
Holding at 103-13 keeps reprices "possible," while any weakness makes them incrementally more probable with each tick lower. Bounce back to 103-14 or higher would go a long way toward mitigating reprice risk--the sooner the better.
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