MBSonMND: MBS MID-DAY
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| Pricing as of 11:03 AM EST | ||||||||||||||
Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard
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10:33AM :
MBS Stem Losses For Now
FNCL 4.5's put in their lows of the day at 100-22 and are currently 2 ticks higher at 100-24. 10yr notes are also off their worst levels, having moderated from 3.69 to 3.674. The worrisome thing there is that there looks to be some pivot-based resistance at 3.66 which roughly marks Friday's yield highs and has served as a firm resistance point for today's lows.
10:02AM :
ALERT:
Stocks Open Higher, Bonds Bonds Weaken Further. Reprice Risk Rising
Half an hour after opening, the S&P is up from 1311 to 1316.21. 10yr notes maintain their linear weakening trend, now at 3.688. MBS have now fallen enough now that lenders who priced early may now entertain repricing for the worse. FNCL 4.5's are at 100-22.
9:25AM :
New MBS Commentary Post
9:23AM :
Production Coupon Shift in Process
We're not ready to pass sole possession of the production coupon title belt onto the 5.0 30yr MBS just yet but lock desks are decidedly more split on their pipeline hedging strategies after the 7-week trading range broke down last Friday. We're already seeing secondary managers make the move toward 5.00% coupons which implies 5.25 could soon become the "Best Execution" 30 year fixed mortgage rate. There will however be a transition period as old 4.50 commitments are filled. This means 5.00 and 5.125% note rates will pay enough rebate to allow for no origination/discount fee quotes, but those offers are very sensitive to rising rates. If FNCL 4.5s move much deeper into the 100 handle from current indications...5.25% will become the new "Best Execution" C30 quote. Heading into $72 billion in 3s/10s/30s this week, benchmark 10s are priced at 3.68% and FNCL 4.5s are bid at 100-25.
9:17AM :
Ongoing Weakness In Treasuries. MBS Holding On
10yr notes are slightly weaker, at 3.666, now in line with Friday's worst levels, and having ticked a bit higher a few times in the past half hour. FNCL 4.5's have not yet dipped below 100-27 this morning, which is where they currently sit, and is 4 ticks worse on the day.
8:39AM :
Treasuries Open In Line With Friday's Weaker Levels
The 10yr note is at 3.66 this morning, just slightly inside Friday's weakest levels of 3.665. MBS FNCL 4.5's are a bit better versus their range, currently at 100-29 after being as low as 100-22 on Friday. There is no significant economic data set to release this morning.
7:35AM :
New MBS Commentary Post
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard
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Adam Quinones : "Stearns, for "Borrower Paid Compensation," tells brokers that in negotiating with a borrower "you are not limited to your compensation plan and can negotiate your compensation up to the Stearns Lending 4% limit. The borrower can pay your compensation by bringing cash to closing or by increasing their loan amount to cover your costs. Your borrower may choose an interest rate which will give them a credit to pay towards third party closing costs only. The borrower cannot use this credit to pay you"
Adam Quinones : "Wholesaler Stearns Lending weighed in on the compensation issue, echoing much of what brokers have seen from other lenders. For "Lender Paid Compensation" (from Stearns), brokers will select a "compensation plan which will pay a fixed percentage of the loan amount. This percentage will not change (depending on the loan program), interest rate, term or other condition of the loan." Stearns tabulated originators' average compensation rate based on 2010 fundings. Stearns tells brokers that, "Your c"
Adam Quinones : "The Mortgage Bankers Association sold their D.C. headquarters a year ago to CoStar Group for $41 million, taking a $49 million loss, and now CoStar is selling it for $101 million. (The MBA's transaction falls under the category of "This sounds exactly like something that would happen to me.") This gives CoStar Group a tidy profit of $60 million in one year after its deal closes with GLL Real Estate Partners of Germany, who will lease the building back to CoStar. The MBA purchased the building fo"
Adam Quinones : "further out the curve inflation expectations are range bound."
Adam Quinones : "remember 2s got banged up for that reason two weeks ago."
Adam Quinones : "3s might see a little extra inflation premium from overseas investors. otherwise id agree"
Chris Kopec : "So, given the carnage of last week, I'm inclined to believe we'll see some solid demand for this week's auctions."
Gus Floropoulos : "im seeing a significant improvement in my pricing on our gmac pricing....must be an error"
Gus Floropoulos : "anyone seen a significant improvement in GMAC?"
Matthew Graham : "AQ has been talking about Margin Squeeze for SOOOOO long and now we're really seeing the masses just beginning to get it in focus"
Chris Kopec : "The segment on CNBC following the bald guy was also interesting....Steve Lisman was touching upon the margin squeeze that AQ has posted about."
John Rodgers : "No credit creation is a valid point"
Adam Quinones : "we're in a weird gray area between 4.5s and 5.0s"
Adam Quinones : "with 5.0s over 103 still"
Adam Quinones : "...if you can fill those trades, s/be a nice chunk of margin in it for you"
Adam Quinones : "30 yr originator selling was split 50/50 between 4.5s and 5.0s "
Ira Selwin : "Some commentary here: http://www.mortgagenewsdaily.com/02022011_tila_cfpb.asp"
Daniel : "any body have a comment on this: The Federal Reserve Board announced (on February 1, 2011) that it will not finalize the Rules it published for comment and will await the transfer of rulemaking authority under TILA to the Consumer Financial Protection Bureau (CFPB) in July 2011. It will leave the final rulemaking to that Bureau. The CFPB has the responsibility to combine the disclosures in RESPA and TILA.""
Ira Selwin : "oh no MG I know, theres still 4 trading going on, just not used to seeing those 5's traded"
Matthew Graham : "it's not like "well, OK, we broke out of the range and magically we're on 5's now" but unless something really unexpected happens that favors bonds, the metamorphosis has begun"
Adam Quinones : "listen to the bald dude talk about inflation: http://www.mortgagenewsdaily.com/video/archive/2011/2/7.aspx#197714"
Adam Quinones : "those posts are warnings: PAR LOAN PRICING IS EXTREMELY SENSITIVE TO FALLING MBS PRICES RIGHT NOW"
Adam Quinones : "we put up a micropost and blog post on the production coupon shift"
Adam Quinones : "Tuesday"
Gus Floropoulos : "whens the roll?"
Matthew Graham : "but the bearish breakout is a feather in it's cap"
Matthew Graham : "I guess it might be a bit premature to say that strategic momentum is "decidedly" higher"
Matthew Graham : "correction still possible, but strategic momentum decidedly higher in yield. No more range. Need short base to increase significantly in order to reverse strategic momentum"
MBS Market Alerts
