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 start the session. (This just in...CHOPPY becomes most used word on MBS Commentary Blog)

The Day Ahead

  • 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?