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You are viewing Micro News from Tuesday, May 20, 2014 - View all recent Micro News
  • 5/20/14
    Ongoing Positive Reprice Potential as MBS Push New Highs

    Bond markets' fortunes have been improving ever since stocks opened at 9:30am.  European markets edified that move into their close at 12:00-12:30pm (i.e. stocks and bond yields lower together).  Most recently, dovish comments from Fed's Dudley added to the same theme.

    Dudley's comments were negative for stocks in that he was clear in saying there was no change in the taper or rate-hike time frames yet economic conditions weren't nearly where the Fed would like them to be.  In other words, 'the economy is too soft, but we're reducing accommodation and raising rates as planned.'

    Other parts of his prepared remarks were beneficial for bond markets.  Particularly, he suggested the Fed revisit its plan to wind down reinvesting proceeds from its Treasury holdings back into Treasuries, saying this would be better accomplished after the initial rate hike. 

    Fannie 3.5s have moved progressively to their best levels of the day, up 12 ticks at 102-16.  Treasuries are now down 2.5bps at 2.51.  Many lenders have already repriced positively.  If you haven't seen one yet, you probably will.

    Category: MBS, UPDATE
    Share:   
  • 5/20/14
    Positive Reprices Increasingly Likely as Bond Markets Extend Gains

    Fannie 3.5s are quickly and somewhat forcefully into the best levels of the day now, up 8 ticks at 102-13 after being down several ticks earlier this morning.  Bond markets have been keen to follow stock prices on bigger moves down (lower in stock price and bond yields), but haven't been too interested in the moves higher seen from 10am to noon.

    MBS have been outperforming Treasuries most of the morning, as the latter see more volatility related to corporate debt hedging.

    Almost any lender is seeing at least 4/32nds (.125) of improvement in MBS since initial rate sheet print times, making positive reprices a decent possibility.  Many lenders who would reprice at current levels will wait a bit longer for evidence that the rally is leveling-off. 

    Category: MBS, UPDATE
    Share:   
  • 5/20/14
    Back into Positive Territory after Stock Open

    From the slightly weaker levels at 9am, MBS and Treasuries are now into positive territory following a moderately-sized, but fast move lower for equities markets after the 9:30am open.  Before that, an exhaustion of selling pressure in European bond markets helped US bond markets find their footing before losing too much ground.

    Fannie 3.5s are now up 3 ticks on the day at 102-07 and 10yr yields are down .75bps at 2.53.  In both cases, these are short term inflection points from yesterday's biggest bout of weakness.  Breaking through would be a positive comment for the rest of the day.  No dice so far.

    ('Breaking through' would imply Fannie 3.5s moving over 102-08 and 10yr yields under 2.527, preferably with confirmation by a move into the 2.51's).

    Category: MBS, UPDATE
    Share:   
  • 5/20/14
    Bond Markets Slightly Weaker After Calm Overnight Trading

    Treasuries had and exceptionally calm overnight session, with 10yr yields trading between 2.532 and 2.500 during both Asian and European market hours.  Core EU debt (i.e. the stuff that's most similar to Treasuries) helped maintain the range into 6am, but pushed yields back up heading into the US session.

    Treasuries and MBS crossed the starting line almost perfectly unchanged.  Since then, they've seen more volatility than momentum in one direction or another.  Both are just slightly weaker at the moment with 10yr yields up 1.1bps at 2.5548 and Fannie 3.5s down 1 tick at 102-04.

    There are no significant scheduled events on tap today.  As we discussed in greater detail yesterday, this week has seen an active corporate debt calendar.  This just means that companies are issuing bonds, and to some extent, those bonds add a bit of competition for Treasuries and MBS. 

    In addition, during the process of pricing and issuing those bonds, corporations frequently use Treasuries to hedge against changes in rates.  Ironically, this tends to have noticeable, even if short term effects on the rest of the bond market, causing volatility to trickle down to MBS as it did yesterday.

    Category: MBS, UPDATE
    Share:   
 
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  • 5/20/14

    Bond markets' fortunes have been improving ever since stocks opened at 9:30am.  European markets edified that move into their close at 12:00-12:30pm (i.e. stocks and bond yields lower together).  Most recently, dovish comments from Fed's Dudley added to the same theme.

    Dudley's comments were negative for stocks in that he was clear in saying there was no change in the taper or rate-hike time frames yet economic conditions weren't nearly where the Fed would like them to be.  In other words, 'the economy is too soft, but we're reducing accommodation and raising rates as planned.'

    Other parts of his prepared remarks were beneficial for bond markets.  Particularly, he suggested the Fed revisit its plan to wind down reinvesting proceeds from its Treasury holdings back into Treasuries, saying this would be better accomplished after the initial rate hike. 

    Fannie 3.5s have moved progressively to their best levels of the day, up 12 ticks at 102-16.  Treasuries are now down 2.5bps at 2.51.  Many lenders have already repriced positively.  If you haven't seen one yet, you probably will.

    Category: MBS, UPDATE
    Share:   
  • 5/20/14

    Fannie 3.5s are quickly and somewhat forcefully into the best levels of the day now, up 8 ticks at 102-13 after being down several ticks earlier this morning.  Bond markets have been keen to follow stock prices on bigger moves down (lower in stock price and bond yields), but haven't been too interested in the moves higher seen from 10am to noon.

    MBS have been outperforming Treasuries most of the morning, as the latter see more volatility related to corporate debt hedging.

    Almost any lender is seeing at least 4/32nds (.125) of improvement in MBS since initial rate sheet print times, making positive reprices a decent possibility.  Many lenders who would reprice at current levels will wait a bit longer for evidence that the rally is leveling-off. 

    Category: MBS, UPDATE
    Share:   
  • 5/20/14

    From the slightly weaker levels at 9am, MBS and Treasuries are now into positive territory following a moderately-sized, but fast move lower for equities markets after the 9:30am open.  Before that, an exhaustion of selling pressure in European bond markets helped US bond markets find their footing before losing too much ground.

    Fannie 3.5s are now up 3 ticks on the day at 102-07 and 10yr yields are down .75bps at 2.53.  In both cases, these are short term inflection points from yesterday's biggest bout of weakness.  Breaking through would be a positive comment for the rest of the day.  No dice so far.

    ('Breaking through' would imply Fannie 3.5s moving over 102-08 and 10yr yields under 2.527, preferably with confirmation by a move into the 2.51's).

    Category: MBS, UPDATE
    Share:   
  • 5/20/14

    Treasuries had and exceptionally calm overnight session, with 10yr yields trading between 2.532 and 2.500 during both Asian and European market hours.  Core EU debt (i.e. the stuff that's most similar to Treasuries) helped maintain the range into 6am, but pushed yields back up heading into the US session.

    Treasuries and MBS crossed the starting line almost perfectly unchanged.  Since then, they've seen more volatility than momentum in one direction or another.  Both are just slightly weaker at the moment with 10yr yields up 1.1bps at 2.5548 and Fannie 3.5s down 1 tick at 102-04.

    There are no significant scheduled events on tap today.  As we discussed in greater detail yesterday, this week has seen an active corporate debt calendar.  This just means that companies are issuing bonds, and to some extent, those bonds add a bit of competition for Treasuries and MBS. 

    In addition, during the process of pricing and issuing those bonds, corporations frequently use Treasuries to hedge against changes in rates.  Ironically, this tends to have noticeable, even if short term effects on the rest of the bond market, causing volatility to trickle down to MBS as it did yesterday.

    Category: MBS, UPDATE
    Share:   
 
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