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You are viewing Micro News from Wednesday, May 7, 2014 - View all recent Micro News
  • 5/7/14
    Fleeting Improvement After Strong 10yr Auction; More Reprice Potential

    MBS and Treasuries briefly moved to their best levels of the day after today's 10yr Treasury Auction.  Demand was slightly stronger than average for quarterly refundings (today's was a refunding, of which there are 4 per year, followed by two "reopenings" making for 12 auctions in total) and the yield was slightly lower than expected based on trading at 1pm.

    For the auction to be stronger on a day where Treasuries had already rallied into 1pm, and when trading levels are already at the lower limits of the range, is obviously positive.  Even so, bond markets only pushed into the day's best levels for a minute or two before pulling back to pre-auction levels. 

    It's too soon to say if this is merely some post-auction volatility that might result in a more pronounced move.  But even if MBS merely hold near current levels, positive reprice potential remains for most lenders, provided they haven't already repriced today.

    Category: MBS, UPDATE
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  • 5/7/14
    Positive Reprice Potential Continues; Holding Gains After Yellen

    Bond markets have experienced more volatility this morning relative to yesterday, though a fairly linear trend of improvement remained intact through Yellen's Q&A session of her testimony before the Joint Economic Committee.  There weren't really any surprises, and the day-over-day changes in bond markets mostly reflect that.

    To wit, 10yr yields are less than 1bp lower at 2.588 and MBS continue outperforming modestly (something they have a tendency to do on the approach to monthly settlement, and following NFP).  Fannie 4.0s are up 4 ticks and Fannie 3.5s are up 6 ticks. 

    Compared to initial rate sheet print times, however, those gains are another 3-4 ticks stronger.  That makes positive reprices an ongoing possibility.  Several have already been reported.

    Category: MBS, UPDATE
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  • 5/7/14
    As Expected, No Surprises from Yellen, but Bonds Improve; Q&A Still to Come

    Bond markets are improving after the release of Fed Chair Yellen's prepared remarks.  They could just as easily have moved in the other direction as there were no surprises in the prepared remarks.

    This wouldn't be the place for surprises though.  If anything serves as a more significant inspiration for financial markets, it's more likely to come during the Q&A that follows her reading of the speech.  Keep in mind, she's talking to United States Congressional Representatives, so most of the questions will be politically self-serving and hold no guarantee of soliciting actionable replies from Yellen.  It does happen sometimes though.

    Treasuries are at the best levels of the morning, down a whopping 1.3bps (read: not really whopping) to 2.584.  Fannie 4.0s are up 2 ticks at 105-10 and Fannie 3.5s are up 2/32nds as well to 102-05.

    Category: MBS, UPDATE
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  • 5/7/14
    Bond Markets Weaker on Putin Comments; What's Econ Data?

    Earlier this morning--just after 8am--Putin told the OSCE (Organization for Security and Cooperation in Europe) that he is ready to discuss ways to resolve the Ukraine crisis.  This was the only obvious market mover of the entire trading day so far, including Asian, European, and domestic trading sessions. 

    Before that, bond markets were walking in the door close to unchanged from yesterday's latest levels.  The overnight session saw 10yr yields bottom-out near 2.58 before they began rising somewhat in the 7am hour. 

    After the initial jolt from the Putin comments, Treasuries and MBS haven't done much.  The 830am Productivity and Costs data was inconsequential.  For the record though, here are the stats:

    • Productivity -1.7 vs -1.0 forecast
    • Labor Costs +4.2 vs +2.6 forecast
    • Reuters headline: "Bad weather sinks US first-quarter Productivity"

    After the absence of a response to that data, Fannie 4.0s are down 4 ticks to 105-05 and 3.5s are down 5 to 101-31.  10yr yields are up 1.5bps at 2.61.  There's no discernible direction right now, though the weak levels of the morning look to be supportive enough ahead of Yellen's Congressional testimony, coming up at 10am.  In other words, it looks like we're bouncing just a little bit and possible picking up some ground here.

    Category: MBS, UPDATE
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  • 5/7/14

    MBS and Treasuries briefly moved to their best levels of the day after today's 10yr Treasury Auction.  Demand was slightly stronger than average for quarterly refundings (today's was a refunding, of which there are 4 per year, followed by two "reopenings" making for 12 auctions in total) and the yield was slightly lower than expected based on trading at 1pm.

    For the auction to be stronger on a day where Treasuries had already rallied into 1pm, and when trading levels are already at the lower limits of the range, is obviously positive.  Even so, bond markets only pushed into the day's best levels for a minute or two before pulling back to pre-auction levels. 

    It's too soon to say if this is merely some post-auction volatility that might result in a more pronounced move.  But even if MBS merely hold near current levels, positive reprice potential remains for most lenders, provided they haven't already repriced today.

    Category: MBS, UPDATE
    Share:   
  • 5/7/14

    Bond markets have experienced more volatility this morning relative to yesterday, though a fairly linear trend of improvement remained intact through Yellen's Q&A session of her testimony before the Joint Economic Committee.  There weren't really any surprises, and the day-over-day changes in bond markets mostly reflect that.

    To wit, 10yr yields are less than 1bp lower at 2.588 and MBS continue outperforming modestly (something they have a tendency to do on the approach to monthly settlement, and following NFP).  Fannie 4.0s are up 4 ticks and Fannie 3.5s are up 6 ticks. 

    Compared to initial rate sheet print times, however, those gains are another 3-4 ticks stronger.  That makes positive reprices an ongoing possibility.  Several have already been reported.

    Category: MBS, UPDATE
    Share:   
  • 5/7/14

    Bond markets are improving after the release of Fed Chair Yellen's prepared remarks.  They could just as easily have moved in the other direction as there were no surprises in the prepared remarks.

    This wouldn't be the place for surprises though.  If anything serves as a more significant inspiration for financial markets, it's more likely to come during the Q&A that follows her reading of the speech.  Keep in mind, she's talking to United States Congressional Representatives, so most of the questions will be politically self-serving and hold no guarantee of soliciting actionable replies from Yellen.  It does happen sometimes though.

    Treasuries are at the best levels of the morning, down a whopping 1.3bps (read: not really whopping) to 2.584.  Fannie 4.0s are up 2 ticks at 105-10 and Fannie 3.5s are up 2/32nds as well to 102-05.

    Category: MBS, UPDATE
    Share:   
  • 5/7/14

    Earlier this morning--just after 8am--Putin told the OSCE (Organization for Security and Cooperation in Europe) that he is ready to discuss ways to resolve the Ukraine crisis.  This was the only obvious market mover of the entire trading day so far, including Asian, European, and domestic trading sessions. 

    Before that, bond markets were walking in the door close to unchanged from yesterday's latest levels.  The overnight session saw 10yr yields bottom-out near 2.58 before they began rising somewhat in the 7am hour. 

    After the initial jolt from the Putin comments, Treasuries and MBS haven't done much.  The 830am Productivity and Costs data was inconsequential.  For the record though, here are the stats:

    • Productivity -1.7 vs -1.0 forecast
    • Labor Costs +4.2 vs +2.6 forecast
    • Reuters headline: "Bad weather sinks US first-quarter Productivity"

    After the absence of a response to that data, Fannie 4.0s are down 4 ticks to 105-05 and 3.5s are down 5 to 101-31.  10yr yields are up 1.5bps at 2.61.  There's no discernible direction right now, though the weak levels of the morning look to be supportive enough ahead of Yellen's Congressional testimony, coming up at 10am.  In other words, it looks like we're bouncing just a little bit and possible picking up some ground here.

    Category: MBS, UPDATE
    Share:   
 
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