MBS OPEN: Yields Higher Ahead of Auction
Posted
Recap of Yesterday
- Stocks higher for third straight session. Probes at S&P 1,026 FAIL.
- Consumers cleaning up balance sheets!!! July Consumer credit -$21.6bn vs. expected -$4.0bn, -$10.3 billion in June. Not much reaction in markets...
- Fed Discount Meeting Minutes: economic activity is leveling off at a "fairly low" level
- Dollar fell to weakest level of the year vs. EURO. Gold rose over $1000/ounce. Oil prices move over $70/barrel
- Slow day in rates market. Traders focused on supply, supply, supply (government and corporate)
- 3 yr note auction stops at 1.487%. Indirects take 54.2%
- Fed buys $4.95bn in 7-10yr TSYs. Lowest amount purchased in this maturity range. Fed has $18.7bn left to spend on TSYs
- Yield curve barely steeper....mostly unchanged
- TSYs cheaper, MBS richer (dollar and relative value wise)
- Day trading continues in MBS world
- Yield spreads tighten on "rate sheet influential" MBS after down in coupon rally.
- Secondary mortgage market Current Coupon ends day near 4.39%
- FN 4.5 range bound. Chopatility obvious in that wide range. Some lenders repriced for better...not all
So far this AM
- Stocks mixed overnight. Hang Seng, NIKKEI, TOPIX, KOSPI lower. Shanghai, DAX, CAC, FTSE all higher.
- Dollar Index mostly unchanged. NYMEX crude more expensive. Gold falls below $1,000
- US stock futures have recovered overnight losses and are higher from yesterday's close.
- 10yr TSY futures prices, which had ticked higher in the nocturnal session, are now lower from yesterday's close. Traders are pricing in $20bn 10yr notes!
The FN 4.5 has been...CHOOPPPPY...to start the session. (This just in...CHOPPY becomes most used word on MBS Commentary Blog)
The Day Ahead
- READ MND STORY
- 10 yr note auction at 1pm
- Beige Book
- Obama pushes Health Care Reform
- TBA MBS settlement process underway....TBA getting more attention from real money accounts
- Mortgages are expensive at moment...Chopatility persists
Want to play along with MG and I? What price do you think the FN 4.5 will close at today?
MBS, TSY, LIBOR QUOTES
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