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You are viewing Micro News from Tuesday, Apr 29, 2014 - View all recent Micro News
  • 4/29/14
    Slow and Steady and Slightly Improved Into Afternoon

    Fannie 4.0s are now 1 to 2/32nds higher on the day, and 5/32nds up from today's weakest levels.  Several positive reprices have been reported and given the defensiveness in play with this morning's rate sheets, that continues to be a possibility for some lenders.

    That said, these gains are minimal, as have been the reprices.  5/32nds trough to peak is about as narrow as it gets on any sort of regular basis, and less than half of that has come in since the last update.

    Some of the improvement has been attributed to S&P's downgrade of several European banks as well as volatility working its way through the Treasury complex relating to Apple's big corporate bond offering.

    With the pace of movement though, assigning blame isn't really necessary (or even possible).  Suffice it to day that rates found themselves above the center of the range this morning and moved back toward the center this afternoon.  The same thing happened in reverse yesterday.

    Category: MBS, UPDATE
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  • 4/29/14
    Bond Markets Improve Following Weaker Consumer Confidence Data

    Consumer Confidence

    • April Consumer Confidence 82.3 vs 83.0 forecast. 83.9 in March
    • 'Present Situation' 78.3 vs 82.5 in March
    • 'Expectations' 84.9 vs 84.8 in March
    • 'Jobs-Hard-To-Get' 32.5 vs 31.4 in March
    • 'Jobs Plentiful' 13.1 vs 13.4 in March

    The most important facet of today's Consumer Confidence data is the relationship between the last two bullet points above.  The difference between them is known as the "labor differential," and is one of several leading indicators of Friday's Nonfarm payrolls.  Simply put, a modest weakening in the labor differential makes a modestly negative comment on NFP, and thus a modest rally for bond markets, which is exactly what we have.

    10yr yields are down to 2.711 from 2.724 on the headlines and Fannie 4.0 MBS are up from 104-10 to 104-12.  These are only token gains for now, but they also serve the function of corralling weakness.  For instance, if the data had been stronger than expected, we may well have broken into the worst levels of the day, and risked a 'snowball selling' situation.

    Category: MBS, UPDATE
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  • 4/29/14
    Looking For Support After Opening Weaker

    The overnight session was shorter than normal for Treasuries as Japan is out on holiday.  Futures were trading, but in name only (abysmal volume).  10yr yields rose roughly 2bps during the European session, dragged higher by weakness in core European debt after a few soothing headlines came out regarding Ukraine. 

    European debt caught a break just before US markets opened with lower inflation data dropping German Bund yields nearly 3bps.  Treasuries didn't glean much benefit from that and were then greeted with domestic accounts who were more prone to selling at the CME open (Treasury futures pit trading).

    10's were as high as 2.731 early this morning, but bounced back, and are currently at 2.719.  MBS opened 3 ticks weaker, lost some ground and bounced with Treasuries.  Fannie 4.0s are currently only 1 tick weaker on the day, once again outperforming Treasuries.

    The only economic data out so far is Case-Shiller Home Prices (+0.0 non-adjusted, +0.8 vs 0.7 forecast, adjusted).  It almost looks like markets reacted to this, but closer inspection reveals the move was underway for several minutes before the data.  Next up is Consumer Confidence at 10am.  While not the most important data of the week, it's definitely the biggest potential market mover on today's calendar.

    Category: MBS, UPDATE
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  • 4/29/14

    Fannie 4.0s are now 1 to 2/32nds higher on the day, and 5/32nds up from today's weakest levels.  Several positive reprices have been reported and given the defensiveness in play with this morning's rate sheets, that continues to be a possibility for some lenders.

    That said, these gains are minimal, as have been the reprices.  5/32nds trough to peak is about as narrow as it gets on any sort of regular basis, and less than half of that has come in since the last update.

    Some of the improvement has been attributed to S&P's downgrade of several European banks as well as volatility working its way through the Treasury complex relating to Apple's big corporate bond offering.

    With the pace of movement though, assigning blame isn't really necessary (or even possible).  Suffice it to day that rates found themselves above the center of the range this morning and moved back toward the center this afternoon.  The same thing happened in reverse yesterday.

    Category: MBS, UPDATE
    Share:   
  • 4/29/14

    Consumer Confidence

    • April Consumer Confidence 82.3 vs 83.0 forecast. 83.9 in March
    • 'Present Situation' 78.3 vs 82.5 in March
    • 'Expectations' 84.9 vs 84.8 in March
    • 'Jobs-Hard-To-Get' 32.5 vs 31.4 in March
    • 'Jobs Plentiful' 13.1 vs 13.4 in March

    The most important facet of today's Consumer Confidence data is the relationship between the last two bullet points above.  The difference between them is known as the "labor differential," and is one of several leading indicators of Friday's Nonfarm payrolls.  Simply put, a modest weakening in the labor differential makes a modestly negative comment on NFP, and thus a modest rally for bond markets, which is exactly what we have.

    10yr yields are down to 2.711 from 2.724 on the headlines and Fannie 4.0 MBS are up from 104-10 to 104-12.  These are only token gains for now, but they also serve the function of corralling weakness.  For instance, if the data had been stronger than expected, we may well have broken into the worst levels of the day, and risked a 'snowball selling' situation.

    Category: MBS, UPDATE
    Share:   
  • 4/29/14

    The overnight session was shorter than normal for Treasuries as Japan is out on holiday.  Futures were trading, but in name only (abysmal volume).  10yr yields rose roughly 2bps during the European session, dragged higher by weakness in core European debt after a few soothing headlines came out regarding Ukraine. 

    European debt caught a break just before US markets opened with lower inflation data dropping German Bund yields nearly 3bps.  Treasuries didn't glean much benefit from that and were then greeted with domestic accounts who were more prone to selling at the CME open (Treasury futures pit trading).

    10's were as high as 2.731 early this morning, but bounced back, and are currently at 2.719.  MBS opened 3 ticks weaker, lost some ground and bounced with Treasuries.  Fannie 4.0s are currently only 1 tick weaker on the day, once again outperforming Treasuries.

    The only economic data out so far is Case-Shiller Home Prices (+0.0 non-adjusted, +0.8 vs 0.7 forecast, adjusted).  It almost looks like markets reacted to this, but closer inspection reveals the move was underway for several minutes before the data.  Next up is Consumer Confidence at 10am.  While not the most important data of the week, it's definitely the biggest potential market mover on today's calendar.

    Category: MBS, UPDATE
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