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Negative Reprice Risk Edges Higher Ahead of 10yr Auction
Posted to: Micro News
Wednesday, September 11, 2013 11:50 AM
By way of update to the previous alert, Fannie 4.0s are now 2 ticks lower to 102-09, taking them into the moderate reprice risk zone. 2 reprices have already been reported. Given that those reprices arrived with only the "borderline" reprice risk levels mentioned in the last alert, we can't rule out the possibility that other lenders will be jumpy.
Then again, the only major lender to reprice so far is the jumpiest. Either way, the risk is out there, and it continues to be the case that a move to 102-06 would make it pervasive.
For what it's worth, 10yr yields only went 0.001% higher between the last alert and this one. Fannie 4.0s low of the day was only extended by 1 tick. Point being, the same sort of support that had a chance to hold last time is still somewhat intact, so this isn't currently the massive sell-off that makes for widespread rate sheet damage. Do what you will with that knowledge and we'll let you know if prospects for widespread damage change.
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