MBS Commentary

MBS Commentaryhttp://www.mortgagenewsdaily.com/mortgage_rates/blog/Mortgage Rates BlogenCommunityServer 2008 SP2 (Build: 31106.96)MBS RECAP: Another Hopeful Morning Dashed by Defensive Realityhttp://www.mortgagenewsdaily.com/mortgage_rates/blog/309417.aspxMon, 20 May 2013 20:44:10 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:309417Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=309417http://www.mortgagenewsdaily.com/mortgage_rates/blog/309417.aspx#comments<p>Bond markets got in this morning and quickly began undoing some of the damage done by the overnight trading session.  Treasuries and MBS both opened flat to slightly stronger and made further gains in the first few hours.  This was soon revealed to be the same old set-up we've seen  play out frequently since May 3rd.  It usually ends with things starting to get slippery after 10am and drifting sideways-to-weaker in the afternoon.  Today was no exception.  10yr yields ran into a floor that had been paved over on Friday after the Consumer Sentiment data.  Before that, it had been a ceiling, providing a good bounce before the Friday afternoon drift took over.  After bouncing there today, it was all over for 10's and MBS alike.  The former moved quickly from 1.92 to 1.975 and MBS dropped from 102-24 in Fannie 3.0s to 102-10 over the same time period.  Both drifted sideways since then and are heading out the door near their lows of the day.  Tomorrow's a toss-up, being the last day before Wednesday's potentially enlightening FOMC Minutes.  There's temptation to think (or 'hope') that we've seen enough selling to stabilize, but technicals leave room for one additional push into weaker territory before Wed's main event.</p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/309417.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/309417/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=309417" width="1" height="1">mbsonmndMBS MID-DAY: Morning Gains Give Way to Mid-Day Rout (again)http://www.mortgagenewsdaily.com/mortgage_rates/blog/309361.aspxMon, 20 May 2013 16:36:02 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:309361Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=309361http://www.mortgagenewsdaily.com/mortgage_rates/blog/309361.aspx#comments<p>Please note the timestamp on the pricing snapshot below, and that it's about an hour and 15 minutes old.  The snapshot will continue to be generated between 11:00-11:10am while the MID-DAY Commentary time may vary depending on market volatility.  Lately, MBS have had an unfortunate tendency to reverse course after making gains (or at least holding ground) in the first two hours of the day.  When this occurs, our resources are fully allocated to reprice alerts for the<a href="http://www.mortgagenewsdaily.com/mbslive/"> MBS Live community</a>.  One of those is already reflected in this recap, but there were two additional instances at 11:33am and 12:12pm.  Those operational details tell about as much of the story as there is to tell for bond markets this morning.  There hasn't been any data, headlines, or events to fuel the volatility.  Tradeflows and pre-FOMC positioning have been dominant, and MBS are not too happy about it this morning.  The biggest pop of selling arrived heading into the 11:00am hour.  That took prices to the levels seen below.  Around 11:30, we moved down another 3-4 ticks in Fannie 3.0s and are currently holding there.  Most every lender has repriced for the worse, beginning at 11:27am.</p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/309361.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/309361/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=309361" width="1" height="1">The Week Ahead: No Scheduled Data Before Wednesday's Important FOMC Minuteshttp://www.mortgagenewsdaily.com/mortgage_rates/blog/309274.aspxMon, 20 May 2013 11:53:00 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:309274Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=309274http://www.mortgagenewsdaily.com/mortgage_rates/blog/309274.aspx#comments<p> </p> <p>Whether or not it turns out to be justified, <strong>hype </strong>and <strong>anticipation </strong>have been building over this week's <strong>FOMC Minutes</strong> for over a week now.  The hype concerns the notion that the Fed Minutes will show a Fed board that is somewhat closer to <strong>tapering </strong>QE3 than the current market consensus might suggest.  Recent Fed speakers, though not all of them, have added to the hype by suggesting tapering could begin this summer.  Some of them have rested their hats on the verisimilitude of a housing recovery, saying it makes more sense to pull back on<strong>MBS first if housing is heating up</strong>.  </p> <p>The other side of last week's coin and of the hyper in general, is the possibility that the Minutes show broader consensus that things are as they should be--that is to say the FOMC is "<strong>staying the course" on QE</strong> and needs to see "more" before scaling back on bond buying programs.  There really hasn't been much reason to doubt this would be the case, but a few seeds of fear have been planted, and now even the skeptics must wait for Wednesday, just in case they're wrong.</p> <p> </p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/309274.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/309274/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=309274" width="1" height="1">MBS RECAP: Reminded of Volatility via Friday Cliff-Divinghttp://www.mortgagenewsdaily.com/mortgage_rates/blog/309212.aspxFri, 17 May 2013 20:46:57 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:309212Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=309212http://www.mortgagenewsdaily.com/mortgage_rates/blog/309212.aspx#comments<p>MBS took a running start downhill this morning before reaching the edge of the cliff marked by yesterday morning's "ledge" of prices.  This was the 102-28 area hit after yesterday's 8:30am economic data, including the weaker-than-expected Jobless Claims figures.  MBS would go on to rally further after Philly Fed data at 10am, resulting in their best day of the month by a wide margin.  Staring over the precipice of that same cliff (OK, it's not a very epic sort of cliff by the time we get back down to 102-28 from yesterday's highs at 103-10, but we're going for some continuity with the title here!), MBS turned, mouthed the words "it was never about the data..." and took the leap, ultimately making a splash (lots of them) around the important 102-16 waterline.  What was all that about the data though?  Surely, we improved yesterday because of weak data and lost ground today due to strong Consumer Sentiment, right?  Not exactly.  The data points over the past two days, in our view, have served the role of "hide-behinds" for trading levels to carve out a range from which to approach next week's watershed FOMC Minutes.  Will it be one-tenth as eventful as the hype seems to suggest?  All we know for now is that markets are sure trading it that way, or maybe the Minutes are a "hide-behind" too!</p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/309212.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/309212/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=309212" width="1" height="1">mbsonmndMBS MID-DAY: Third Time is NOT the Charm for Bond Marketshttp://www.mortgagenewsdaily.com/mortgage_rates/blog/309158.aspxFri, 17 May 2013 16:51:57 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:309158Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=309158http://www.mortgagenewsdaily.com/mortgage_rates/blog/309158.aspx#comments<p>Here we are again...  All but a few days this week have seen morning sell-offs that have required negative reprice alerts for<a href="http://www.mortgagenewsdaily.com/mbslive/"> MBS Live subscribers</a>.  As previously intimated, such alerts delay the publication of these free recaps and will be reflected in the afternoon recap.  It also means that the price table below is quite a bit out-dated at the moment, as it is automatically generated for this morning recap between 11:00am and 11:10am.  Prices are quite a bit lower now and I've posted two more alerts since then.  Consumer Sentiment wasn't the only culprit here.  Rather, the pre-FOMC "<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/309072.aspx">range-finding</a>" is probably what accelerated the losses with the Sentiment data merely serving to reinforce yesterday's highs.  We've been trending back in the other direction ever since, and in a surprisingly linear fashion.  In one manner of thinking, Consumer Sentiment "fit inside" that preexisting trend, but definitely reinforced it.</p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/309158.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/309158/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=309158" width="1" height="1">The Day Ahead: Winding Down and Range Finding; 2 Cool Chartshttp://www.mortgagenewsdaily.com/mortgage_rates/blog/309072.aspxFri, 17 May 2013 11:53:00 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:309072Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=309072http://www.mortgagenewsdaily.com/mortgage_rates/blog/309072.aspx#comments<p> </p> <p>The bulk of the week's activity has passed, from a calendar standpoint, and this morning's Consumer Sentiment data is all that's left on the domestic agenda.  Even in the overnight session, there are no interesting data sets, and really, no data period, unless you consider Canadian CPI interesting (and we'd recommend against such perversion).  </p> <p>These days tend to go one of two ways.  More often than not, after big sell-offs and moderate bounces like we've seen this week, these Friday's fizzle mostly sideways as long as the data doesn't get any snowballs rolling.  Occasionally, however, Sentiment data, and even other headlines can do just that.  So I guess that's Fizzle with a chance of snowballs?</p> <p>Here are a few charts to help frame the trading day ahead.  First up, take a look at MBS. </p> <p> </p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/309072.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/309072/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=309072" width="1" height="1">MBS RECAP: Purposeful Rally Helps Define Pre-FOMC Rangehttp://www.mortgagenewsdaily.com/mortgage_rates/blog/309018.aspxThu, 16 May 2013 20:47:37 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:309018Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=309018http://www.mortgagenewsdaily.com/mortgage_rates/blog/309018.aspx#comments<p>Yesterday and again early this morning (before the data), we discussed the potential significance of yesterday's prices failing to make a new low for the first time in 9 days.  It's not a common thing for MBS or Treasuries to go that many sessions in a row making new lows, and earlier in the week we noted that sell-off's in Treasuries seldom go more than 8-12 sessions without pausing for at least 2 days.  The current sell-off hit it's 9th day yesterday, and the strong bounce at the same highs (yield) seen on Tuesday set the stage for 1.98 to be the high end of the near-term range heading into next Wednesday.  The analogous level for MBS would be 102-16.  After dipping for a moment to 102-17 this morning, MBS never looked back, though they did lose a little bit of their sparkle late in the day, gaining just over 3/8ths of a point vs the 5/8ths achieved at 3pm.  </p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/309018.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/309018/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=309018" width="1" height="1">mbsonmndMBS MID-DAY: Bounce Back/Rally Gains Tractionhttp://www.mortgagenewsdaily.com/mortgage_rates/blog/308955.aspxThu, 16 May 2013 15:50:35 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:308955Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=308955http://www.mortgagenewsdaily.com/mortgage_rates/blog/308955.aspx#comments<p>Hopefully, in talking about the half point rally in MBS we're not unintentionally "jinxing" it, but yeah--there's a half point rally underway in MBS.  This all started out innocently enough as bond markets walked in domestic doors roughly level with yesterday's closing prices.  Those prices were roughly mid-point on the day yesterday.  That was an important place to be this morning considering yesterday's lows were the first in 9 sessions to NOT fall below the previous sessions lows.  That meant that any ground-holding or improvement today would help confirm the case for a medium term range boundary being hit on Tuesday and Wednesday.  We've held above those lows and then some, thanks to another round of economic data that has been universally bond-market-bullish.  Claims, Housing Starts, Philly Fed...  All weaker.  Inflation: still not a factor.  MBS moved up from unchanged right to yesterday's highs after the first round of data and had doubled those gains by the time Philly Fed was digested.  10yr yields are treating 1.88 as a CEILING at the moment.  The longer that continues to be the case, the more traction the broader 3-day bounce gains.</p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/308955.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/308955/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=308955" width="1" height="1">mbsonmndThe Day Ahead: Economic Data Deluge, Part 2; Chance to Confirm Bounce Part 1http://www.mortgagenewsdaily.com/mortgage_rates/blog/308886.aspxThu, 16 May 2013 12:01:00 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:308886Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=308886http://www.mortgagenewsdaily.com/mortgage_rates/blog/308886.aspx#comments<p>If the presence of greater amounts of economic data was a benefit for bond markets on Wednesday (and we're not sure that it was), then Thursday has even greater potential to confirm or reject that potential correlation.  The benefit of Wednesday's economic data can be questioned because bond markets nearly had a melt-down heading into the PM hours, and they weren't saved by data.  MBS and Treasuries both caught solid technical support as they revisited their weakest levels from the previous session.  For the first time in 9 sessions, MBS did NOT make a new low (even though that seemed like a probability on several occasions)!</p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/308886.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/308886/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=308886" width="1" height="1">MBS RECAP: Plenty of Volatility, But Yesterday's Lows Defendedhttp://www.mortgagenewsdaily.com/mortgage_rates/blog/308816.aspxWed, 15 May 2013 20:36:01 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:308816Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=308816http://www.mortgagenewsdaily.com/mortgage_rates/blog/308816.aspx#comments<p>It's about 24 hours too soon to start getting excited, but for the very first time in May, MBS did NOT make new lows today!  That's not for lack of trying though... Fannie 3.0s were off to another uneventful, positive start--something we've seen several times so far this month, including yesterday--before taking a nosedive heading into 11am.  This was an MBS-specific event, best we can tell, with stocks and bonds following suit several minutes after lower MBS coupons began losing bidders.  Prices fell quickly from 102-26 to 102-19 and corrected before proceeding to the lows of the day at 102-16.  The nice thing about those lows?  Not as low as yesterday, by a whole 1/64th of a point!  Hey... It's not much, but if we're going to bounce back and make a range between now and FOMC Minutes next week, we gotta start somewhere.  Hopefully that's what today was, but to be fair, the "lower highs" in prices throughout the day were equally ominous.  We'd need tomorrow to hold the same ground before getting more optimistic about such things.</p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/308816.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/308816/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=308816" width="1" height="1">mbsonmndMBS MID-DAY: Another Mid-Morning Sell-Offhttp://www.mortgagenewsdaily.com/mortgage_rates/blog/308767.aspxWed, 15 May 2013 16:46:08 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:308767Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=308767http://www.mortgagenewsdaily.com/mortgage_rates/blog/308767.aspx#comments<p>Once again, please note the timestamp in the pricing snapshot below, as it is about an hour and a half old now.  This time gap will continue to be the case when negative reprice alerts are necessary in the 11am hour in order to facilitate the most timely analysis for the MBS Live community.  With that said, negative reprices were again necessary in the 11am hour!  Several of them, in fact!  The first of these made the cut today to be included in MID-DAY, and conveys about as much info as we ever got regarding the sell-off.  There was no standout piece of data and no headline to drive the weakness, but it clearly began on the bid side of the MBS market.  Buyers left the building and those looking to sell followed them all the way out the door.  The fact that stock markets took off higher shortly thereafter is perhaps worth half an eyebrow being raised over the possibility that MBS were sold to free up cash for equities, but after late April and early May, it doesn't really feel safe to discuss the concept of anything that sounds like a "great rotation" type trade.  More important than causality is reality, and it's been an ugly one for MBS, which are now down to 102-16-ish.  </p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/308767.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/308767/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=308767" width="1" height="1">The Day Ahead: Economic Calendar Picks Up, Will Markets Cool Off?http://www.mortgagenewsdaily.com/mortgage_rates/blog/308674.aspxWed, 15 May 2013 11:09:00 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:308674Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=308674http://www.mortgagenewsdaily.com/mortgage_rates/blog/308674.aspx#comments<p> </p> <p>Wednesday brings enough data in the morning hours that it could help shape the trading day for bond markets.  This wasn't the case on Tuesday where an innocuous Import/Export Prices report stood alone, leaving markets to the whim of tradeflows/technicals.  This ultimately resulted in nasty day for Treasuries and MBS, taking us to levels that seemed completely out of bounds as recently as last Thursday.  Last night's RECAP was a <a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/308668.aspx">pretty good synopsis</a> of the recent drama, and came out later than usual. </p> <p>Further losses are possible from several different technical perspectives, and we can't simply assume that "things have been bad enough!" and therefor, must soon turn a corner.  The counterpoint to that warning is that uptrends like this one tend to offer at least some measure of respite.  The current sell-off has occupied 8 sessions without consecutive closes in stronger territory.  In other words, yields closed lower on 5/8, but didn't those gains on the 9th.  Eight sessions is entering old-age for such trends.  Even if they end up forming much bigger, longer sell-offs, we usually start seeing that push back of at least a few days in the 8-12 session range.  </p> <p> </p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/308674.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/308674/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=308674" width="1" height="1">MBS RECAP: Falling Knife Landed, Got Kicked, Now Falling Againhttp://www.mortgagenewsdaily.com/mortgage_rates/blog/308668.aspxWed, 15 May 2013 00:32:25 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:308668Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=308668http://www.mortgagenewsdaily.com/mortgage_rates/blog/308668.aspx#comments<p> <p>On May 3rd, after NFP, we said: "historically, a move like today's that runs counter to more than a month of trending, has been more likely to mark the beginning of a move back to other side of whatever the recent range or broader trend might be.  Next week is frustratingly empty with the exception of Treasury auctions, and will give markets a chance to trade it out based on tradeflows and technicals rather than fundamental data."  </p> <p>The following week (which was last week) was indeed a chance to "trade it out," but that didn't begin in earnest until after the Treasury auctions.  Dealers didn't get prices as high as they wanted before headline risk was thrown into the mix, causing a fairly abrupt sell-off on Friday.  The current week probably really had a chance to hold ground at Friday's weakest levels, but every card that's been turned over has been against bond markets.  The path of least resistance became quickly capitulative today as the "falling knife" mentality set in (whereby there's limited interest in stepping in to buy Treasuries/MBS until you can be more certain they won't simply continue lower in price).</p> <p>The proverbial knife looked like it might have hit the ground early Monday morning when 10yr Treasury yields topped out around 1.93.  That continued to be the case through this morning (d<span>espite a few quick breaks to 1.94 yesterday morning), but markets had a hard time extracting the knife from the ground.  In other words, we had no luck moving much below 1.90 before a series of unfortunate events (enumerated in detail in the alerts and updates below) came along and kicked the knife off a nearby cliff, sending it back into falling mode.  We ended the domestic session never getting much evidence that it had landed, and thus continue to wait for more compelling evidence.  Wednesday's data might be enough to help build that case, if it all goes our way, but Thursday's has the better chance.</span></p> </p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/308668.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/308668/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=308668" width="1" height="1">MBS MID-DAY: Selling Trend Emerges After Opening Strongerhttp://www.mortgagenewsdaily.com/mortgage_rates/blog/308547.aspxTue, 14 May 2013 16:18:25 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:308547Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=308547http://www.mortgagenewsdaily.com/mortgage_rates/blog/308547.aspx#comments<p> <p>Please note the timestamp in the pricing snapshot below (11:09am EST).  The mid-day post will always pull a snapshot of current prices between 11:00 and 11:10am, with the actual publication of the commentary following 20-60 minutes later.  On mornings with light movement in MBS, the mid-day tends to come out sooner and on mornings with more movement, it will come out later, especially when negative reprices are required for the<a href="http://www.mortgagenewsdaily.com/mbslive/"> MBS Live</a> community.  Today is one such morning, and reprice alerts went out at 8:33am and 8:53am, each incrementally increasing the risk.  <a href="http://www.mortgagenewsdaily.com/mbslive/">MBS Live</a> subscribers get these alerts in real-time and they will appear in the afternoon 'MBS-RECAP' here on the free site.</p> <p>As for the market conditions that brought about the alerts, MBS and Treasuries began the day in good shape--both of them at least holding their ground relative to yesterday's closing levels before improving into 9am. They topped out there and went sideways until European markets led Treasuries higher.  The Fed buying operation in Treasuries was also going on during this time and dealers offered up relatively large chunk of 7-10 year maturities ($13.68 bln, of which the Fed bought $3.31 bln).  Italy's Economy Minister said Italian banks don't need EU aid right around the time the results of the purchase operation came out.  Not to be outdone by goings-on in Europe and the US, news regarding Japan hit right around the same time, saying that Japanese investors are favoring French sovereign debt over US Treasuries because the French debt offers more attractive yields after hedging costs.</p> </p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/308547.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/308547/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=308547" width="1" height="1">The Day Ahead: Past Few Sessions Offered Clues About Technical Levelshttp://www.mortgagenewsdaily.com/mortgage_rates/blog/308468.aspxTue, 14 May 2013 10:45:00 GMT2bb7a989-b681-446d-a7f2-bd5f0562f228:308468Matthew Graham0http://www.mortgagenewsdaily.com/channels/mortgage_rates/rsscomments.aspx?PostID=308468http://www.mortgagenewsdaily.com/mortgage_rates/blog/308468.aspx#comments<p>Tuesday is the lightest day of the week in terms of scheduled data without only Import/Export prices in the 8:30am time slot.  This report tends to not have an effect on bond market trading, and in fact, inflation reports have been a downright lousy indicator of bond market trading since QE's and were only ever marginally correlative at best.  Here's a long term chart of year over year core CPI and PPI vs 10yr yields. </p> <p>While there's certainly a general correlation between CPU and Treasuries over the 25 years of this chart, it's not the first place we'd look for guidance on any given trading day.  As such, there's no reason to be too keen on import/export prices this morning.  That leaves bond markets to find most of their inspiration from any worthy headlines, tradeflows and technicals.  With respect to the latter, the past few trading sessions have offered some near term clues--lines in the sand if you will--for both Treasuries and MBS.  The longer any of these lines remains unbroken, the more significant a statement it makes when it breaks about potential shifts in trend or range.</p>...(<a href="http://www.mortgagenewsdaily.com/mortgage_rates/blog/308468.aspx">read more</a>)<p><div style="background-color:#D4EDC9;border:1px solid #BDD4B3;padding:3px 5px 3px 6px; color:#000000;font-family:arial,sans-serif;font-size:12px;"><strong>Forward this article via email:</strong>  <a href="http://www.mortgagenewsdaily.com/channels/308468/3/forward.aspx" style="color:#3333CC;">Send a copy of this story</a> to someone you know that may want to read it.</div></p><img src="http://www.mortgagenewsdaily.com/aggbug.aspx?PostID=308468" width="1" height="1">