Posted
I'm not happy about putting out this alert... It's the last hour of a low volume rally day and we're seeing losses that would justify reprices for the worse in most other contexts... In other words, moving 12 ticks from 101-04 to 100-26 would be grounds for a reprice for the worse under most conditions. But whether or not it will affect your rates today is much less of a certainty.
C'mon now... In the grand scheme of things, it doesn't look too bad. And indeed from the trading perspective, two good words to describe the movement are "nominal" and "expected." Like so many times before, it's critical to examine past behavior and pricing time frames at individual lenders. The later in the day you got a reprice for the better and the more "jumpy" that particular lender has been historically, the greater the chances of them sniping at some of your YSP.
Basically, the "big picture" lender sees the chart above and does nothing.
The slightly more reactionary lender sees just the one day chart:
A bit more justification to reprice there, but still not conclusive...
The lender that repriced aggressively for the better (maybe 2 times today), is known for repricing for the worse very quickly, and got their last set of rates to you some time after the noon hour, may well be looking at the exact same data with an even shorter time frame:
Same price drops, 3 ways of looking at it, 3 ways to consider your personal hedge ratio (pipeline allocation between floating and locking and/or GUTFLOP!)
Again, I'm not happy about this... There is strong support against profit taking at yesterday's high levels of 100-26. Plus we're so close to going out, no losses would be too high for some lenders. Illiquid, summer flows... More important data and events on the horizon... You name it... But we at least gotta let you know.
MBS, Tsy, and LIBOR Quotes...
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