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You are viewing Micro News from Monday, May 12, 2014 - View all recent Micro News
  • 5/12/14
    Sideways to Slightly Stronger--Outperforming Treasuries

    While Treasuries have spent most of the afternoon drifting just slightly weaker, MBS have done the opposite.  The outperformance owes itself in part to favorable supply/demand technicals in MBS specifically, but Treasuries also had some sector-specific weakness due to corporate debt hedging (where a company that's issuing corporate debt sells Treasuries in order to lock in a rate of return between the announcement of their bond deal and when it's fully subscribed).

    The outperformace hasn't been nearly enough to bring MBS back into positive territory on the day, but prices are back in line with levels seen during the day's initial rate sheets.  That makes negative reprices highly unlikely, and some lenders that priced a bit later (when prices began to fall) could even be considering a positive reprice.

    Category: MBS, UPDATE
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  • 5/12/14
    Quick, Small Jump to Weakest Levels; Not Enough For Significant Reprice Risk

    Bond markets just took a small jump to their weakest levels of the day.  As far as causality goes, there's nothing overt behind the more vertical movement in the past few minutes beyond a technical break of the day's previous high yields in Treasuries.

    Follow-through on the selling has been minimal, with MBS only 2 ticks lower than the previous morning range.  For most any lender, there's no motivation to reprice here, and certainly not any motivation based solely on MBS price movement. 

    Category: MBS, UPDATE
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  • 5/12/14
    Mostly Holding Ground After Extending Overnight Weakness

    Treasuries were slightly weaker at the start of the overnight session, partly reflecting a continuation of the negative technical shift (i.e. chart patterns starting to suggest a pull back to higher rates) that began last week as well as a generally better risk tolerance. 

    European bond markets benefited from increasing expectations about some sort of easing (rate cut or QE or both) all but promised by Draghi on Thursday.  While any easing wouldn't be announced until June's policy meeting, the expectations are boosting core European bond markets.  That sort of rally doesn't translate as readily to US Treasuries, as was the case last night.

    10yr yields crossed the 8am mark just over Friday's highest levels and continued to lose ground before bouncing at 2.647.  MBS began the day close to Friday's latest levels but followed Treasuries' early move into weaker territory.

    Fannie 3.5s are down 5/32nds at 101-22 and Fannie 4.0s are down 3 ticks to 104-26.  There is no significant economic data on the schedule today, and the next market moving inspiration is anyone's guess.  Treasuries and MBS are currently trying to bounce back from this morning's weakest levels, and have been holding their ground since roughly 8:40am (MBS, arguably since 8:20am), though not making much progress in the other direction.

    Category: MBS, UPDATE
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  • 5/12/14

    While Treasuries have spent most of the afternoon drifting just slightly weaker, MBS have done the opposite.  The outperformance owes itself in part to favorable supply/demand technicals in MBS specifically, but Treasuries also had some sector-specific weakness due to corporate debt hedging (where a company that's issuing corporate debt sells Treasuries in order to lock in a rate of return between the announcement of their bond deal and when it's fully subscribed).

    The outperformace hasn't been nearly enough to bring MBS back into positive territory on the day, but prices are back in line with levels seen during the day's initial rate sheets.  That makes negative reprices highly unlikely, and some lenders that priced a bit later (when prices began to fall) could even be considering a positive reprice.

    Category: MBS, UPDATE
    Share:   
  • 5/12/14

    Bond markets just took a small jump to their weakest levels of the day.  As far as causality goes, there's nothing overt behind the more vertical movement in the past few minutes beyond a technical break of the day's previous high yields in Treasuries.

    Follow-through on the selling has been minimal, with MBS only 2 ticks lower than the previous morning range.  For most any lender, there's no motivation to reprice here, and certainly not any motivation based solely on MBS price movement. 

    Category: MBS, UPDATE
    Share:   
  • 5/12/14

    Treasuries were slightly weaker at the start of the overnight session, partly reflecting a continuation of the negative technical shift (i.e. chart patterns starting to suggest a pull back to higher rates) that began last week as well as a generally better risk tolerance. 

    European bond markets benefited from increasing expectations about some sort of easing (rate cut or QE or both) all but promised by Draghi on Thursday.  While any easing wouldn't be announced until June's policy meeting, the expectations are boosting core European bond markets.  That sort of rally doesn't translate as readily to US Treasuries, as was the case last night.

    10yr yields crossed the 8am mark just over Friday's highest levels and continued to lose ground before bouncing at 2.647.  MBS began the day close to Friday's latest levels but followed Treasuries' early move into weaker territory.

    Fannie 3.5s are down 5/32nds at 101-22 and Fannie 4.0s are down 3 ticks to 104-26.  There is no significant economic data on the schedule today, and the next market moving inspiration is anyone's guess.  Treasuries and MBS are currently trying to bounce back from this morning's weakest levels, and have been holding their ground since roughly 8:40am (MBS, arguably since 8:20am), though not making much progress in the other direction.

    Category: MBS, UPDATE
    Share:   
 
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