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You are viewing Micro News from Thursday, Jan 23, 2014 - View all recent Micro News
  • 1/23/14
    Positive Reprice Potential for More Lenders

    Positivity in bond markets continues its steamroller-esque path into the best levels in over a month.  Volumes have been huge, and we're left with the sense that market participants are releasing some pent-up demand in light of today being the only offering of economic data.  For sure, the addition of help from the stock lever and the technical break of 2.82 in 10yr yields helps facilitate the follow-through as well.

    The net effect is a Fannie 4.0 coupon that's now up over half a point on the day.  Early pricing lenders are looking at 5/32nds of improvement, enough for positive reprices and later-pricing lenders are just on the edge.  Bottom line, the last few ticks of improvement make reprices more of a possibility for lenders who've been holding off until now.

    Category: MBS, UPDATE
    Share:   
  • 1/23/14
    Bond Markets Head-Fake Higher After Data, but no Follow-Through

    After rallying all morning, bond markets hesitated to extend gains at first following the weaker-than-expected Existing Home Sales data.  In the past few minutes, MBS were finally able to add another tick to the to already solid gains and 10yr yields broke below 2.80.  Both have subsequently shied away from those levels, however.

    Here's the rundown of the data:

    • Existing Sales 4.87 mln unit rate vs 4.94 forecast
    • November revised to 4.82 mln from 4.90 previously
    • Inventory of homes for sale at 1.86 mln units, 4.6 months worth
    • median price $198,000, up slightly from November
    • 14 pct were distressed sales
    • Full Release

    With the brief extension of strength and pull-back, there has been no net-effect from the data.  Equities markets (i.e. the "stock lever") look to be as much of a consideration as anything so far today.  Stock prices and bond yields have been highly correlated.

    Category: MBS, UPDATE
    Share:   
  • 1/23/14
    Bond Markets Stronger Overnight and After Claims Data

    Treasury yields fell steadily throughout the overnight session, helped along by weak manufacturing data in China and a strong 10yr auction in the UK.  Apart from the overt motivations, volume and tradeflows suggest traders were predisposed to maintain the range anyway.

    In other words, yesterday's weakness introduced the risk that bond markets would begin drifting out the wrong end of the mid-January sideways range, and the trading since then is a relatively firm decision to maintain the range.

    In fact, as far as Treasuries are concerned (because MBS aren't quite there yet), we're right on the lower yield boundary of that range.  The morning commentary discussed a pre-FOMC "lead-off" forming today and although it seemed more at risk of being the weaker variety yesterday, there's no rule against it going the other direction.

    The overnight strength was augmented by as-expected Jobless Claims numbers and a surprisingly higher Continued Claims reading.  Here are the details:

    • Claims 326k vs 326k forecast
    • Continued Claims 3.056 mln vs 2.93 mln forecast
    • Full Release

    10yr yields are currently right at 2.82 and Fannie 4.0 MBS are up 11 ticks at 103-31+

    Category: MBS, UPDATE
    Share:   
 
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  • 1/23/14

    Positivity in bond markets continues its steamroller-esque path into the best levels in over a month.  Volumes have been huge, and we're left with the sense that market participants are releasing some pent-up demand in light of today being the only offering of economic data.  For sure, the addition of help from the stock lever and the technical break of 2.82 in 10yr yields helps facilitate the follow-through as well.

    The net effect is a Fannie 4.0 coupon that's now up over half a point on the day.  Early pricing lenders are looking at 5/32nds of improvement, enough for positive reprices and later-pricing lenders are just on the edge.  Bottom line, the last few ticks of improvement make reprices more of a possibility for lenders who've been holding off until now.

    Category: MBS, UPDATE
    Share:   
  • 1/23/14

    After rallying all morning, bond markets hesitated to extend gains at first following the weaker-than-expected Existing Home Sales data.  In the past few minutes, MBS were finally able to add another tick to the to already solid gains and 10yr yields broke below 2.80.  Both have subsequently shied away from those levels, however.

    Here's the rundown of the data:

    • Existing Sales 4.87 mln unit rate vs 4.94 forecast
    • November revised to 4.82 mln from 4.90 previously
    • Inventory of homes for sale at 1.86 mln units, 4.6 months worth
    • median price $198,000, up slightly from November
    • 14 pct were distressed sales
    • Full Release

    With the brief extension of strength and pull-back, there has been no net-effect from the data.  Equities markets (i.e. the "stock lever") look to be as much of a consideration as anything so far today.  Stock prices and bond yields have been highly correlated.

    Category: MBS, UPDATE
    Share:   
  • 1/23/14

    Treasury yields fell steadily throughout the overnight session, helped along by weak manufacturing data in China and a strong 10yr auction in the UK.  Apart from the overt motivations, volume and tradeflows suggest traders were predisposed to maintain the range anyway.

    In other words, yesterday's weakness introduced the risk that bond markets would begin drifting out the wrong end of the mid-January sideways range, and the trading since then is a relatively firm decision to maintain the range.

    In fact, as far as Treasuries are concerned (because MBS aren't quite there yet), we're right on the lower yield boundary of that range.  The morning commentary discussed a pre-FOMC "lead-off" forming today and although it seemed more at risk of being the weaker variety yesterday, there's no rule against it going the other direction.

    The overnight strength was augmented by as-expected Jobless Claims numbers and a surprisingly higher Continued Claims reading.  Here are the details:

    • Claims 326k vs 326k forecast
    • Continued Claims 3.056 mln vs 2.93 mln forecast
    • Full Release

    10yr yields are currently right at 2.82 and Fannie 4.0 MBS are up 11 ticks at 103-31+

    Category: MBS, UPDATE
    Share:   
 
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