Bond markets, including MBS are generally weaker today vs yesterday but MBS and Treasuries have both seen decent supportive bounces at technical levels. For MBS, the odds-on favorite for an intermediate-term pivot point is 103-10. Prices briefly hit that level in the wake of this morning's scheduled Fed "Twist" buying. 10yr yields continue to find support in the mid 2.01's, which is a noticeable pivot point stretching back to April 9th. Volume and volatility are fairly light in the big picture, those prices have fluctuated fairly rapidly between highs and lows today. The range in MBS has been exceedingly narrow at 103-16 to 103-10, the latter consequently suggests itself as a good indication of growing reprice risk with "early lenders" considering it on the approach and "the rest" if we break lower.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
Pricing as of 11:06 AM EST
Morning Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts
and updates issued via email and text alert to MBS Live subscribers
Bond Markets Slightly Weaker After Data, MBS Outperform
Both MBS and Treasuries opened in slightly weaker territory this morning after the European session offered a generally more positive tone. The sense of "risk on" vs yesterday's "risk off" was readily apparent in the tight connection between stocks and bonds overnight. In conjunction with improving German investor sentiment, Spanish debt auctions were strong enough to undo some of yesterday's flight-to-safety.
Weaker-than-expected Housing starts helped bond markets slightly after 8:30am, but as we noted in the "Day Ahead" (linked below, markets remain more interested in the broader tonal shifts in RISK, led primarily by developments in Europe. To that end, the IMF was out at 9am with upward revisions to growth forecasts and more importantly German FinMin Schaeuble followed shortly saying Spain wasn't a candidate for a bailout and that the fundamental Spanish picture wasn't comparable to other countries receiving aid.
Until then, 10yr yields had been honing in on 2% and moved just over 2.01% after the news. At 9:15am, weaker-than-expected Industrial Production data at home helped yields get back to the low 2's, but no discernible break lower yet.
The saving graces are twofold. First, there's a nice little 2 week pivot point just over 2.01 in 10yr yields, we may be seeing some measure of technical support there. Secondly, MBS are outpeforming and down only 1 tick now at 103-15 in Fannie 3.5's. 10yr yields are heavily considering breaking below 2% again, currently up only 2 bps on the day at 2.0016.
No more scheduled data, and ever-waning Euro-drama into this time of day.
ECON: Industrial Production Unchanged in March
* Industrial Output +0.0 vs +0.3 consensus
* Capacity Utilization 78.6 pct as expected
* Manufacturing Output lower, Mining Output Higher
*production dragged down by auto manufacturing
Industrial production was unchanged in March for a second month but rose at an annual rate of 5.4 percent in the first quarter of 2012. Manufacturing output declined 0.2 percent in March but jumped 10.4 percent at an annual rate in the first quarter.
The gain in manufacturing output in the first quarter was broadly based: Even excluding motor vehicles and parts, which jumped at an annual rate of nearly 40 percent, manufacturing output moved up at an annual rate of 8.3 percent and output for all but a few major industries increased 5 percent or more. In March, production at mines rose 0.2 percent and the output of utilities gained 1.5 percent. For the quarter, however, the output of utilities dropped at an annual rate of 13.8 percent, largely as a result of unseasonably warm temperatures over the past several months, while the output of mining fell 5.4 percent. At 96.6 percent of its 2007 average, total industrial production for March was 3.8 percent above its year-earlier level.
The rate of capacity utilization for total industry edged down to 78.6 percent, a rate 2.1 percentage points above its level from a year earlier but 1.7 percentage points below its long-run (1972--2011) average.
ECON: Housing Starts Fall More Than Expected, Permits Up
* Starts down 5.8 pct vs Feb -2.8 pct
*Unit Rate 654k vs 705k consensus, lowest since 10/11
*permits 747k unit rate vs consensus 710k, highest since 9/08
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 747,000. This is
4.5 percent (±1.1%) above the revised February rate of 715,000 and is 30.1 percent (±1.6%) above the March 2011 estimate of
Single-family authorizations in March were at a rate of 462,000; this is 3.5 percent (±1.1%) below the revised February figure of
479,000. Authorizations of units in buildings with five units or more were at a rate of 262,000 in March.
Privately-owned housing starts in March were at a seasonally adjusted annual rate of 654,000. This is 5.8 percent (±15.6%)* below the
revised February estimate of 694,000, but is 10.3 percent (±14.6%)* above the March 2011 rate of 593,000.
Single-family housing starts in March were at a rate of 462,000; this is 0.2 percent (±12.6%)* below the revised February figure of
463,000. The March rate for units in buildings with five units or more was 178,000.
Privately-owned housing completions in March were at a seasonally adjusted annual rate of 600,000. This is 4.2 percent (±13.5%)*
above the revised February estimate of 576,000 and is 0.5 percent (±15.3%)* above the March 2011 rate of 597,000.
Single-family housing completions in March were at a rate of 440,000; this is 1.4 percent (±12.5%)* above the revised February rate of
434,000. The March rate for units in buildings with five units or more was 146,000.
Live Chat Featured Comments
Adam Quinones : "sleepy mkt"
Adam Quinones : "50/49"
Jude Bridwell : "gm all, anybody have any odds that we get back in the green today?"
Jill Statz : "Ira...I send all my USDA to GSF Funding out of Brookfield, WI (chase is there servicer) purchases are at 48 hours and re-fi's are at 72 hours"
Matt Hodges : "by far the worse is USDA at roughly 30 days"
Ira Selwin : "Any other turn time from other lenders?"
Geoff Allison : "*5 USDA"
Geoff Allison : "Conventional purchase with Wells is now 10 days. 5 for FHA, 3 VA, % USDA."
Brent Borcherding : "I largely send to 2 local wholesalers, 24-48."
Matthew Graham : "RTRS - U.S. MARCH INDUSTRIAL OUTPUT UNCHANGED (CONSENSUS +0.3 PCT) VS FEB UNCHANGED "
Ira Selwin : "anyone else have any other wholesale turn aroudn time?"
Brent Borcherding : "Ira--I think Wells is 18 days in underwriting on a conventional refi, 5 days for purchase, to your question earlier."
Matthew Graham : "I trust that when he says a country won't need a bailout, to duck and cover"
Matt Hodges : "i trust schaeuble"
Matthew Graham : "the important news here is Schaeuble"
Brent Borcherding : "Yeah, Spain is not comparable...much worse."
Matthew Graham : "RTRS- SCHAEUBLE SAYS EXPECTS G20 WILL AGREE TO BOOST IMF RESOURCES BY ABOUT $400 BLN AT SPRING MEETING THIS WEEK "
Matthew Graham : "RTRS- SCHAEUBLE SAYS SPAIN NOT CANDIDATE FOR BAILOUT, FUNDAMENTAL SPANISH DATA NOT COMPARABLE TO COUNTRIES RECEIVING AID "
Matthew Graham : "RTRS- GERMAN FINMIN SCHAEUBLE TO REUTERS: SPAIN DELIVERING, ITALY HAS DELIVERED ON MEASURES TO REDUCE DEBT/DEFICITS "
Matthew Graham : "RTRS - IMF SAYS RISKS TO U.S. OUTLOOK INCLUDE FISCAL UNCERTAINTY, WEAK HOUSING MARKETS, POTENTIAL SPILLOVER FROM EUROPE'S DEBT CRISIS "
Matthew Graham : "RTRS- IMF SAYS ECB HAS ROOM FOR FURTHER MONETARY EASING GIVEN VERY LOW DOMESTIC INFLATION; FED AND BOJ ALSO MAY NEED TO EASE FURTHER "
Matthew Graham : "RTRS - IMF RAISES 2012 FORECAST FOR WORLD GROWTH TO 3.5 PCT FROM 3.3 PCT IN JANUARY; SEES LESS THREAT OF A SHARP GLOBAL SLOWDOWN "
Ira Selwin : "rford - what turn time are you experiencing by the way? How long?"
Ira Selwin : "If they are too slow, this is the time to get your rep from another lender to give your loans a push. Im sure they would appreciate the loans."
Ira Selwin : "2. Not really sure if they care if loans go somewhere else with their market share right now. Im sure everyone else is slow as well."
Ira Selwin : "1. When they feel they are too slow, they do hire more staff"
Ira Selwin : "2 parts to your last point."
rford : "my hope is that if enough brokers complain, maybe they will do something about it since we are their source of originations, along with sending more loans to other lenders..."
rford : "thanks MG! I want o give my Wells rep some flack for the horrible turn times there, but need some data to back up my thoughts"
Matthew Graham : "http://www.mortgagenewsdaily.com/data/mortgage-originations.aspx"
Matthew Graham : "http://www.mortgagenewsdaily.com/data/mortgageapplications.aspx"
Ken Crute : "you found it Rford "
rford : "where is the best place to find data on overall mortgage applications and origination volume"
Matthew Graham : "RTRS- US MARCH HOUSING PERMITS RATE HIGHEST SINCE SEPT 2008 (797,000 UNITS) "
Matthew Graham : "RTRS - US MARCH SINGLE-FAMILY STARTS -0.2 PCT TO 462,000 UNIT RATE; MULTIFAMILY -16.9 PCT TO 192,000 UNIT RATE "
Matthew Graham : "RTRS - US MARCH HOUSING PERMITS 747,000 UNIT RATE (CONSENSUS 710,000) VS FEB 715,000 UNIT RATE "
Matthew Graham : "RTRS- US MARCH HOUSING PERMITS +4.5 PCT VS FEB +4.8 PCT "
Matthew Graham : "RTRS - US MARCH HOUSING STARTS 654,000 UNIT RATE, LOWEST SINCE OCT 2011, (CONSENSUS 705,000) VS FEB 694,000 (PREV 698,000)"
Matthew Graham : "RTRS- US MARCH HOUSING STARTS -5.8 PCT VS FEB -2.8 PCT (PREV -1.1 PCT) "