This morning, we suggested that markets are relatively out of trading ideas until the next big-ticket items start hitting and thus, might use whatever opportunities arise to make course corrections within a broader range (read more about the SNEAKY TRICK if you missed it this morning). We also noted that there are different ways to determine what that "broader range" might be. Now with today's trading mostly in the books, not only are we getting ongoing confirmation of these "course corrections within a broader range" but there's an emerging visual representation of this in 10yr yields (which, as you may know, we prefer to MBS as far as assessing trends in interest rates despite the fact that this is an MBS site, especially when bigger potential shifts are in question). In the chart below, you can see the trend channel (teal lines) that we've previously discussed, and how recent yield movement has broken below that trend. Now the "higher lows" since the 17'th represent a counter-trend that forms a triangle with the lower long-term trendline. Interestingly enough these converging trends will have to pick a winner by June 1st, which is Friday of next week, and incidentally, NFP day...
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 4:05 PM EST
Afternoon Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts
and updates issued via email and text alert to MBS Live subscribers
MBS Steady Near Their "Least Bad" Levels After 7yr Auction
We mention the 7yr auction in the title merely to make note that it happened and didn't really have an effect on the long end of the curve or MBS. The auction's bid-to-cover was well within the range of recent results and the high yields of 1.203 is actually decent despite the 1.201 when-issued yield. 7's had been outperforming other spots of the curve recently and into the auction, so the tepid results are actually rather neutral.
Fannie 3.5 MBS are down 4 ticks on the day at 104-09 after having been as low as 104-06 earlier. 10yr yields saw much higher volume earlier in the morning while bouncing on ceilings at 1.77 and then closer to 1.78. They're currently at 1.767 and seemingly possess the will to hold steady or rally depending on whatever cues can be mustered from headlines or related market movement. With the latter in mind, we'd note that the stock lever has been fairly well connected for the past few hours, and that's not too surprising considering the week is essentially over as tomorrow is an almost data-free half day.
Smooth sailing for now and maybe even a positive reprice from on of the "early crowd" lenders, but nothing justifying mass-scale improvements by any means. More importantly, risks of negative reprices are at their lowest levels of the day.
Live Chat Featured Comments
Ted Rood : "FHA connection, if case has been archived, you have to restore it. Or just send me all info including best # to reach customer at and I'll check it for you!"
Brayden Alexander : "Is there a way to look up a case number on an old FHA loan?"
MMNJ : "see, your first mistake was trying to use "logic" when chatting with the 2nd mortgage holder....."
Thomas Nelson : "Then have them take a picture of their "shocked face" when the borrower defaults because they couldnt get a lower payment on the 1st mortage and the bank's 2nd mortgage is hanging out in the wind."
Thomas Nelson : "MMNJ.....ask the "piano loan" quoter gently.....do they owe you the money on the 2nd mortgage whether the appraisal is 100k or 1million?"
Jeff Anderson : "Correct, MMNJ. Some will and some won't. But the MI transfer is the bigger issue. I just emailed you, TQ."
MMNJ : "TQ, you just need to make sure 2nd lienholder will accept a PIW. I had a similar one, and when I was speaking with 2nd mortgage company and told them it was a Harp loan, they said "I don't care if it's a piano loan -- get an appraisal""
Thomas Quann : "Anyone know a lener that does MI Transfer with United Guaranty Residential Insurance CO?"
Matthew Graham : "RTRS- US TREASURY - PRIMARY DEALERS TAKE $12.04 BLN OF 7-YEAR NOTES SALE, INDIRECT $12.38 BLN "
Matthew Graham : "RTRS- U.S. 7-YEAR NOTES BID-TO-COVER RATIO 2.80, NON-COMP BIDS $9.17 MLN "
Matthew Graham : "pretty much, maybe a B today. 7's are tougher than 5's"
Matthew Graham : "RTRS - U.S. SELLS $29 BLN 7-YEAR NOTES AT HIGH YIELD 1.203 PCT, AWARDS 91.24 PCT OF BIDS AT HIGH "
Victor Burek : "another b-?"
Matthew Graham : "official results, 1.203 at 2.80 BTC. "
Matthew Graham : "7yr auction coming up in a sec. looking for around 2.85 BTC. when-issued currently at 1.201"
Ted Rood : "As soon as the forensic audit of their loan is finished, we'll know more. Sadly, they lent their reserves to Greece and don't have the $2M euro fee for the audit"
Matthew Graham : "They heard greece got a sweet Mod, but no one would work with them until they were behind on their payments."
Matthew Graham : "they're still on hold with HopeNow"
Ted Rood : "Sadly, Spain's 3/27 at 6.5% is up and has risen to 10.5%. Broker got an extra 2% YSD by adding a 5 year PP, but as long as collateral has doubled in value and Spain's DTI is OK, they should be able to eat the prepay and get a better rate."
Brett Boyke : "really? I'm sorry, I guess I forgot to report that?"
Brett Boyke : "speaking of Spain, they "found" another 28 Billion in debt"
Brett Boyke : "http://www.reuters.com/article/2012/05/23/us-spain-regions-idUSBRE84M1AU20120523"
Victor Burek : "but he does point out probably the biggest flaw with the eurozone"
Andrew Horowitz : "there is another great line in that article VB will not like it because it comes from Obama : One problem has been the need to get agreement between either the 17 EU countries that use the euro as their currency or all 27 member states.
"I think about my one Congress, then I start thinking about 17 congresses and I start getting a little bit of a headache"
Brett Boyke : "just keep kicking the can with hopes growth rides in and saves the day"
Andrew Horowitz : "here is a link to the full story if anyone wants to read the MSNBC article :http://worldnews.msnbc.msn.com/_news/2012/05/24/11844112-so-much-for-the-spanish-dream-euro-crisis-turns-suburbs-into-ghost-towns?lite"
Andrew Horowitz : "its a short story but an enjoyable one, highly recommended by Greek members of parliament "
Brent Borcherding : "How to make friends and influence people by Irene Lozano Domingo."
Andrew Horowitz : "oh this bodes well for the EU : from MSNBC article "Germany has got a lot of profit from the euro [currency]. Because Spain was rich, we bought many things that were made in Germany," an independent deputy in Spain's congress, Irene Lozano Domingo, told Hilsum.
"We are all linked, so if we are going to hell, they are coming with us. This is what they have to see," she added."
Gus Floropoulos : "if not u can always take it to Sovereign and still get a great rate"
Gus Floropoulos : "if its a PERS approved project ur good"
Scott Valins : "any NYC condo experts - I have a purchase on a Brooklyn Condo - it's Fannie Mae approved, all units have been conveyed to owners, only 25 out of 62 though are o/o and the HOA has not been turned over yet? Any shot at this?"