Register or Sign in        Email This Page     Link To This Page    
Visit MND at MBA in NYC!
1,270
# of Questions
Micro News Archives
Use the calendar to view Micro News posts from a specific date.
Today  |  Yesterday  |  Random
Bottom Right Default
State Name: New Jersey
State Name underscore: New_Jersey
State Name dash: New-Jersey
State Name lower underscore: new_jersey
State Name lower dash: new-jersey
State Name lower: new jersey
State Abbreviation: NJ
State Abbreviation Lower: nj
You are viewing Micro News from Wednesday, Jul 30, 2014 - View all recent Micro News
  • 7/30/14
    Bond Markets Sideways Near Weakest Levels After Treasury Close

    Bond markets have done a reasonably good job of not losing any more ground following the FOMC Announcement.  While it brought a solid amount of trading activity into the market relative to most of today, it remains completely dwarfed by the impact of this morning's GDP 'beat.' 

    10yr yields got supportive in the 2.56% zone that we suggested 2 alerts ago.  This simply looked like the first major inflection point for any large sell-off today.  In other words, as far as "big, bad moves" go, this one was fairly logical so far.

    Keep in mind that pit trading in Treasury futures closes at 3pm.  Bond markets can be less liquid for the next 2 hours (which we refer to as 'after hours').  This occasionally results in choppier movement.  All that to say, we're not out of the woods completely.  Holding sideways here is good for today if it stops the bleeding, but is also a logical place to rest if bond markets plan on marching higher in yield.

    MBS have held up slightly better than Treasuries today, and have also held their ground since 1pm.  Fannie 3.5s are now down "only" 19 ticks (it was as much as 23 ticks earlier, or .71875).  Despite the ground-holding, we've lost so much ground today that some lenders could still have lingering negative reprices to get out.  Of course risks could also increase again if bonds slide in 'after hours' trading.

    Category: MBS, UPDATE
    Share:   
  • 7/30/14
    Key Differences in FOMC Statements; All About Inflation; Not Much Market Reaction

    Some of the less consequential changes from last time to this time:

    • "recent months" became "the second quarter" in addressing a rebound in economic activity
    • Before: "labor market indicators generally showed further improvement"
    • After: "Labor market conditions improved," but the Fed added that a range of indicators suggest a "significant underutilization of labor resources."  Maybe they get paid per letter?  I think that just means "labor market slack."  Or better yet, job market decent, but not great.
    • Recover in housing sector now "remains" slow, vs "remained" last time.

    And the biggest changes:

    • After: "Inflation has moved somewhat closer to the committee's longer-run objective."
    • Before: "Inflation has been running below the committee's longer -run objective

    • Before: "labor market conditions will continue to improve gradually toward" levels the committee judges consistent with its dual mandate."
    • After: "labor market indicators and inflation moving toward levels the committee judges consistent with its dual mandate."

    • Before: "The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term."
    • After: " likelihood of inflation running persistently below 2 percent has diminished somewhat."
       

    Here's the full mark-up of past vs current FOMC Statements: http://www.mortgagenewsdaily.com/mortgage_rates/blog/381455.aspx

    Basically, it's all about an incremental increase in the assessment of inflation.  It's fodder for the anticipated rate-hike being on track.  That said, it hasn't come as much of a surprise to markets.  Not only have bonds not moved much, but there hasn't been a major change in the shape of the yield curve either (and that's where we'd expect to see markets pricing in any major changes in the rate-hike outlook).

    X

    Category: MBS, UPDATE
    Share:   
  • 7/30/14
    Just in case it's not already abundantly clear...
    MBS Updates are a service provided to MBS Live! subscribers only.
    Learn More | Start a Free Trial | View MBS Prices
    Category: MBS, alert
    Share:   
  • 7/30/14
    Bond markets continue to slide. Factors in play: 1...
    MBS Updates are a service provided to MBS Live! subscribers only.
    Learn More | Start a Free Trial | View MBS Prices
    Category: MBS, alert
    Share:   
  • 7/30/14
    We're now crossing into territory where negative...
    MBS Updates are a service provided to MBS Live! subscribers only.
    Learn More | Start a Free Trial | View MBS Prices
    Category: MBS, alert
    Share:   
  • 7/30/14
    Negative reprice risk could increase with the next...
    MBS Updates are a service provided to MBS Live! subscribers only.
    Learn More | Start a Free Trial | View MBS Prices
    Category: MBS, alert
    Share:   
  • 7/30/14
    GDP +4.0 Percent. Bond Markets Sharply Weaker, but Holding For Now
    • Q2 GDP +4.0 vs +3.0 forecast
    • Q1 revised to -2.1 from -2.9
    • Consumer Spending +2.5 vs +1.2 previously
    • Business Inventory Change +$93.4 bln, adds 1.66% to GDP, biggest contribution since Q4 2011

    Naturally, bond markets are much weaker on the strong data.  10yr yields rose a quick 4bps to 2.50+ and MBS fell 8 ticks to 102-08 (Fannie 3.5s).  For now, however, that's as far as the selling has gotten, and there's a fighting chance that we bounce here.  Time will tell.  

    4.0 vs 3.0 may seem like a big beat, but to reiterate something in this morning's Day Ahead, that 3.0 was potentially artificially lower than it otherwise would have been.  Here's the relevant part:

    "This is a classic case study in market psychology!  Human psychology even!  You've perhaps heard of "the bump" when it comes to sales negotiations.  This is no different.  The ridiculously low print for Q1 has market participants broadly convinced that today will be worse than they otherwise would predict."

    In fact, the range of forecasts went as high as 5.2%!  4.0 may well have been closer to objective reality, had forecasters not been so scarred by the -2.9 in Q1 (now revised to -2.1).

    While the selling pressure is minimal so far, it sets us up for a bit of an uphill battle over the next 2 days.  The burden of proof now falls to the bond bulls, and we'd need a friendly FOMC Statement this afternoon (that would be one that doesn't say anything new, basically), and a 'miss' on Friday's payrolls numbers.

    Category: MBS, UPDATE
    Share:   
  • 7/30/14
    Bond Markets Bounce Back Toward Unchanged After ADP; GDP Coming Up

    The overnight session was largely uneventful as European bond markets essentially took the day off from volatility.  Instead, German Bunds moved gently higher from the technical resistance created by yesterday's all time low yields.

    Treasuries moved higher at a slightly quicker pace, possibly with some anxiety over today's heavy economic calendar.  The first relief of the day was in with ADP Employment missing to the tune of 218k vs 230k forecast.  By the time you read this, GDP will be out, and we'll be on to the next move.

    Category: MBS, UPDATE
    Share:   
 
No Micro News Posts Here.

Options:
 
MBS Micro News updates are a service provided to MBSonMND subscribers only.
Learn More | Start a Free Trial | Open the Dashboard
  • 7/30/14

    Bond markets have done a reasonably good job of not losing any more ground following the FOMC Announcement.  While it brought a solid amount of trading activity into the market relative to most of today, it remains completely dwarfed by the impact of this morning's GDP 'beat.' 

    10yr yields got supportive in the 2.56% zone that we suggested 2 alerts ago.  This simply looked like the first major inflection point for any large sell-off today.  In other words, as far as "big, bad moves" go, this one was fairly logical so far.

    Keep in mind that pit trading in Treasury futures closes at 3pm.  Bond markets can be less liquid for the next 2 hours (which we refer to as 'after hours').  This occasionally results in choppier movement.  All that to say, we're not out of the woods completely.  Holding sideways here is good for today if it stops the bleeding, but is also a logical place to rest if bond markets plan on marching higher in yield.

    MBS have held up slightly better than Treasuries today, and have also held their ground since 1pm.  Fannie 3.5s are now down "only" 19 ticks (it was as much as 23 ticks earlier, or .71875).  Despite the ground-holding, we've lost so much ground today that some lenders could still have lingering negative reprices to get out.  Of course risks could also increase again if bonds slide in 'after hours' trading.

    Category: MBS, UPDATE
    Share:   
  • 7/30/14

    Some of the less consequential changes from last time to this time:

    • "recent months" became "the second quarter" in addressing a rebound in economic activity
    • Before: "labor market indicators generally showed further improvement"
    • After: "Labor market conditions improved," but the Fed added that a range of indicators suggest a "significant underutilization of labor resources."  Maybe they get paid per letter?  I think that just means "labor market slack."  Or better yet, job market decent, but not great.
    • Recover in housing sector now "remains" slow, vs "remained" last time.

    And the biggest changes:

    • After: "Inflation has moved somewhat closer to the committee's longer-run objective."
    • Before: "Inflation has been running below the committee's longer -run objective

    • Before: "labor market conditions will continue to improve gradually toward" levels the committee judges consistent with its dual mandate."
    • After: "labor market indicators and inflation moving toward levels the committee judges consistent with its dual mandate."

    • Before: "The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term."
    • After: " likelihood of inflation running persistently below 2 percent has diminished somewhat."
       

    Here's the full mark-up of past vs current FOMC Statements: http://www.mortgagenewsdaily.com/mortgage_rates/blog/381455.aspx

    Basically, it's all about an incremental increase in the assessment of inflation.  It's fodder for the anticipated rate-hike being on track.  That said, it hasn't come as much of a surprise to markets.  Not only have bonds not moved much, but there hasn't been a major change in the shape of the yield curve either (and that's where we'd expect to see markets pricing in any major changes in the rate-hike outlook).

    X

    Category: MBS, UPDATE
    Share:   
  • 7/30/14
    Just in case it's not already abundantly clear...
    MBS Updates are a service provided to MBS Live! subscribers only.
    Learn More | Start a Free Trial | View MBS Prices
    Category: MBS, alert
    Share:   
  • 7/30/14
    Bond markets continue to slide. Factors in play: 1...
    MBS Updates are a service provided to MBS Live! subscribers only.
    Learn More | Start a Free Trial | View MBS Prices
    Category: MBS, alert
    Share:   
  • 7/30/14
    We're now crossing into territory where negative...
    MBS Updates are a service provided to MBS Live! subscribers only.
    Learn More | Start a Free Trial | View MBS Prices
    Category: MBS, alert
    Share:   
  • 7/30/14
    Negative reprice risk could increase with the next...
    MBS Updates are a service provided to MBS Live! subscribers only.
    Learn More | Start a Free Trial | View MBS Prices
    Category: MBS, alert
    Share:   
  • 7/30/14
    • Q2 GDP +4.0 vs +3.0 forecast
    • Q1 revised to -2.1 from -2.9
    • Consumer Spending +2.5 vs +1.2 previously
    • Business Inventory Change +$93.4 bln, adds 1.66% to GDP, biggest contribution since Q4 2011

    Naturally, bond markets are much weaker on the strong data.  10yr yields rose a quick 4bps to 2.50+ and MBS fell 8 ticks to 102-08 (Fannie 3.5s).  For now, however, that's as far as the selling has gotten, and there's a fighting chance that we bounce here.  Time will tell.  

    4.0 vs 3.0 may seem like a big beat, but to reiterate something in this morning's Day Ahead, that 3.0 was potentially artificially lower than it otherwise would have been.  Here's the relevant part:

    "This is a classic case study in market psychology!  Human psychology even!  You've perhaps heard of "the bump" when it comes to sales negotiations.  This is no different.  The ridiculously low print for Q1 has market participants broadly convinced that today will be worse than they otherwise would predict."

    In fact, the range of forecasts went as high as 5.2%!  4.0 may well have been closer to objective reality, had forecasters not been so scarred by the -2.9 in Q1 (now revised to -2.1).

    While the selling pressure is minimal so far, it sets us up for a bit of an uphill battle over the next 2 days.  The burden of proof now falls to the bond bulls, and we'd need a friendly FOMC Statement this afternoon (that would be one that doesn't say anything new, basically), and a 'miss' on Friday's payrolls numbers.

    Category: MBS, UPDATE
    Share:   
  • 7/30/14

    The overnight session was largely uneventful as European bond markets essentially took the day off from volatility.  Instead, German Bunds moved gently higher from the technical resistance created by yesterday's all time low yields.

    Treasuries moved higher at a slightly quicker pace, possibly with some anxiety over today's heavy economic calendar.  The first relief of the day was in with ADP Employment missing to the tune of 218k vs 230k forecast.  By the time you read this, GDP will be out, and we'll be on to the next move.

    Category: MBS, UPDATE
    Share:   
 
No Micro News Posts Here.

Options:
 
 
No Micro News Posts Here.

Options:
 
 
No Micro News Posts Here.

Options:
 
Did you know?
You can see a list of all comments on MND by clicking the 'Read the Latest Comments' option under the 'Community' menu.
 

More From MND

Mortgage Rates:
  • 30 Yr FRM 3.86%
  • |
  • 15 Yr FRM 3.12%
  • |
  • Jumbo 30 Year Fixed 3.73%
MBS Prices:
  • 30YR FNMA 4.5 108-12 (0-01)
  • |
  • 30YR FNMA 5.0 110-12 (0-02)
  • |
  • 30YR FNMA 5.5 111-25 (0-00)
Recent Housing Data:
  • Mortgage Apps 4.93%
  • |
  • Refinance Index 0.90%
  • |
  • FHFA Home Price Index 0.67%