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You are viewing Micro News from Thursday, Feb 20, 2014 - View all recent Micro News
  • 2/20/14
    Gaining Some Ground After Hours; Reprices Almost Justified

    After spending most of the day holding steady at the weakest levels in about a month, MBS have gained a few ticks heading into 'after hours' trading (refers to the 2 hours following the 3pm ET close of Pit trading at the CME). 

    Treasuries are on board with the same movement, but only in terms of price/yield.  In other words, there's not much volume in play, nor is there overt justification.  This just happens to be the direction of the late-day drift.  At best, an argument could be made for technical support around 104-00 in Fannie 4.0s and in the 2.76 region in 10yr yields

    (But don't expect 2.76000 to mean anything as that technical level has been an approximate landing zone for long term movement that can range from 2.774 to 2.755.  It was just easier to say "2.76" than to go into this long explanation, but now that it's out there, there ya go).

    Keep in mind that lenders didn't reprice with today's weakness, and many of them were out with rates before Philly Fed.  Technically, it wouldn't be out of the question to see a lender or two offer one of those "stability" reprices, but it's not abundantly likely for most.

    Category: MBS, UPDATE
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  • 2/20/14
    Bouncing Along Same Levels Since Mid-Morning

    There's nothing new to report.  MBS continue to bounce along the same narrow range set up during the mid-morning hours.  Fannie 3.5s are doing a bit better than 4.0s in that regard, but not enough to matter.

    There was a barely-detectable bit of weakness just after the 1pm auction of Treasury Inflation-Protected Securities (TIPS), but that washed-out in about 20 minutes and the sideways grind continued. 

    Category: MBS, UPDATE
    Share:   
  • 2/20/14
    Bond markets jumped into positive territory for about...
    MBS Updates are a service provided to MBS Live! subscribers only.
    Learn More | Start a Free Trial | View MBS Prices
    Category: MBS, alert
    Share:   
  • 2/20/14
    Bond Markets Unchanged to Marginally Weaker After First Round of Data

    Bond markets began the overnight session holding steady.  Weaker-than-expected manufacturing data out of China made for a noticeable jolt lower in Treasury yields and stock futures.  Narrow, sideways trading resumed about 8 minutes later and persisted until the European session brought yields back in the other direction, ultimately walking in the door near unchanged levels, but trending higher/weaker from 7:30am.

    MBS opened in line with yesterday's latest levels and were essentially unchanged ahead of the first round of economic data, comprised by Jobless Claims and Consumer Prices (CPI).  CPI was in line with expectations and isn't much of a market mover these days anyway. 

    Claims, on the other hand, cover the "survey week" this week for NFP (because today's Jobless Claims data is based on last week's filings  and the all-important Nonfarm Payrolls establishment survey asks businesses how many employees received compensation during the pay period that includes the 12th of the month).  There's nothing too magical about that, but markets tend to may a bit more attention to the 'survey week' instance of Jobless Claims.

    This time around, there isn't much of a reaction, perhaps because the data was so close to consensus.  Here's a run down:

    Initial Jobless Claims

    • 336k vs 335k forecast, 339k previously (unrevised)
    • Continued Claims 2.981 mln vs 2.970 mln forecast
    • Share of market movement among 8:30am data: 9/10.  Granted, there's really not much market movement at all, so this is just as easily "N/A."

    Consumer Price Index

    • CPI +0.1 vs +0.1 forecast
    • Core CPI (excludes food/energy) +0.1 vs +0.1 forecast
    • Year over year +1.6 vs +1.6 forecast, both for headline and 'core'
    • Share of market movement among 8:30am data: 1/10

    If anything, bond markets were slightly weaker in the immediate wake of the data, but have since stabilized.  Fannie 4.0s are unchanged on the day and 10yr yields are only 0.0016 higher.  The 8:30am data defers to 10am Philly Fed data.  As noted in the 'Day Ahead,' it's not yet clear if the weather issues will continue to prevent logical trading reactions to the data, but Philly Fed is our best bet to see old-fashioned cause and effect this morning.

    Category: MBS, UPDATE
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  • 2/20/14

    After spending most of the day holding steady at the weakest levels in about a month, MBS have gained a few ticks heading into 'after hours' trading (refers to the 2 hours following the 3pm ET close of Pit trading at the CME). 

    Treasuries are on board with the same movement, but only in terms of price/yield.  In other words, there's not much volume in play, nor is there overt justification.  This just happens to be the direction of the late-day drift.  At best, an argument could be made for technical support around 104-00 in Fannie 4.0s and in the 2.76 region in 10yr yields

    (But don't expect 2.76000 to mean anything as that technical level has been an approximate landing zone for long term movement that can range from 2.774 to 2.755.  It was just easier to say "2.76" than to go into this long explanation, but now that it's out there, there ya go).

    Keep in mind that lenders didn't reprice with today's weakness, and many of them were out with rates before Philly Fed.  Technically, it wouldn't be out of the question to see a lender or two offer one of those "stability" reprices, but it's not abundantly likely for most.

    Category: MBS, UPDATE
    Share:   
  • 2/20/14

    There's nothing new to report.  MBS continue to bounce along the same narrow range set up during the mid-morning hours.  Fannie 3.5s are doing a bit better than 4.0s in that regard, but not enough to matter.

    There was a barely-detectable bit of weakness just after the 1pm auction of Treasury Inflation-Protected Securities (TIPS), but that washed-out in about 20 minutes and the sideways grind continued. 

    Category: MBS, UPDATE
    Share:   
  • 2/20/14
    Bond markets jumped into positive territory for about...
    MBS Updates are a service provided to MBS Live! subscribers only.
    Learn More | Start a Free Trial | View MBS Prices
    Category: MBS, alert
    Share:   
  • 2/20/14

    Bond markets began the overnight session holding steady.  Weaker-than-expected manufacturing data out of China made for a noticeable jolt lower in Treasury yields and stock futures.  Narrow, sideways trading resumed about 8 minutes later and persisted until the European session brought yields back in the other direction, ultimately walking in the door near unchanged levels, but trending higher/weaker from 7:30am.

    MBS opened in line with yesterday's latest levels and were essentially unchanged ahead of the first round of economic data, comprised by Jobless Claims and Consumer Prices (CPI).  CPI was in line with expectations and isn't much of a market mover these days anyway. 

    Claims, on the other hand, cover the "survey week" this week for NFP (because today's Jobless Claims data is based on last week's filings  and the all-important Nonfarm Payrolls establishment survey asks businesses how many employees received compensation during the pay period that includes the 12th of the month).  There's nothing too magical about that, but markets tend to may a bit more attention to the 'survey week' instance of Jobless Claims.

    This time around, there isn't much of a reaction, perhaps because the data was so close to consensus.  Here's a run down:

    Initial Jobless Claims

    • 336k vs 335k forecast, 339k previously (unrevised)
    • Continued Claims 2.981 mln vs 2.970 mln forecast
    • Share of market movement among 8:30am data: 9/10.  Granted, there's really not much market movement at all, so this is just as easily "N/A."

    Consumer Price Index

    • CPI +0.1 vs +0.1 forecast
    • Core CPI (excludes food/energy) +0.1 vs +0.1 forecast
    • Year over year +1.6 vs +1.6 forecast, both for headline and 'core'
    • Share of market movement among 8:30am data: 1/10

    If anything, bond markets were slightly weaker in the immediate wake of the data, but have since stabilized.  Fannie 4.0s are unchanged on the day and 10yr yields are only 0.0016 higher.  The 8:30am data defers to 10am Philly Fed data.  As noted in the 'Day Ahead,' it's not yet clear if the weather issues will continue to prevent logical trading reactions to the data, but Philly Fed is our best bet to see old-fashioned cause and effect this morning.

    Category: MBS, UPDATE
    Share:   
 
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