Whether you want to chalk it up to the European markets dragging domestic markets down, vice versa, or some of both, the price action in Treasuries and MBS was clear today. The post-FOMC weakness was not only unwound, but bond markets made it a point to level off in ranges not associated with yesterday's FOMC-related trading. That has been largely beneficial for MBS as they covered all the ground lost yesterday. Several lenders repriced positively this afternoon after MBS put in a strong, linear, orderly rally effort in the morning hours. Everything went sideways after the European close--perhaps there's a connection there. Perhaps it's incidental. Whatever the case, bond markets weren't quite feeling a break to even stronger levels and are coasting out the door now in a medium-small sideways range, though erring a bit on the weak side of that range at the moment.
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 4:06 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
Positive Reprices Reported as MBS Trudge Resolutely Upward
The morning hours consisted of a slow, steady, and almost perfectly technical rally for MBS which are now up 10 ticks in Fannie 3.5s at 105-03 and 15 ticks in Fannie 3.0's at 102-22. The latter is now through it's highs from yesterday despite accounting for the lion's share of new originations today. That speaks volumes to the recent cycle of "optimism, fear, relief" for the Down-In-Coupon trade.
Essentially, 3.0's were in favor heading into FOMC, then pulled back more quickly than 3.5's yesterday, but are once again outperforming as MBS breathe a relative sigh of relief. Morning uptrends remain intact, but face stern opposition overhead. The broader bond market rally would have to see 10's extend a bp or two into the 1.5's before we'd expect MBS to maintain current trajectories.
When the uptrends are broken (if they're broken), we'll be looking for sideways support at various levels (we'll take anything we can get really), ranging from yesterday's highs to yesterday's first ledges of support ahead of the FOMC Announcement. For Fannie 3.5's, this would be 105-03 (current levels) and 104-30+.
Several lenders have repriced positively, and it's not unreasonable to expect to see a few more at current levels, with the likelihood increasing to the extent current levels are maintained or improved upon.
Live Chat Featured Comments
Victor Burek : "REPRICE: 2:18 PM - Nexbank Better"
Victor Burek : "REPRICE: 1:24 PM - Plaza Better"
Gus Floropoulos : "REPRICE: 1:21 PM - PHH Better"
Rich DiLallo : "REPRICE: 1:09 PM - Flagstar Better"
Eric Franson : "Where's the Like button MG?"
Paul L. Martin : "REPRICE: 12:40 PM - Suntrust Better"
Matthew Graham : "I've heard "when banks compete you win," but I don't think Spain and Greece got the memo that this doesn't mean banks should compete to see who can be the most insolvent."
Ted Rood : "Spain says will let Greece run its banks, likes their "flexibility" on debt restructuring."
Matthew Graham : "Euro 1.2556"
Matthew Graham : "RTRS - SPAIN SAYS DON'T EXPECT TO SHUT DOWN BANKS, PREFER TO RESTRUCTURE "
Rob Clark : "REPRICE: 12:24 PM - Provident Funding Better"
Eric Franson : "REPRICE: 12:20 PM - Wells Fargo Better"
B-C : "yes my company has their GNMA"
Chip Harris : "were you able to get it done anywhere?"
B-C : "i believe so Chip, i had something similar"
Chip Harris : "I have a lady that did a loan mod with Wells about 5 years ago due to husband getting sick and losing his job. She tried to do a stereamline with Wells a year ago and they said that they couldn't do anythign because of the loan mod. She said she spoke to HUD and that they don't have such a guideline. Anyone know if that is just a Wells overlay?"
Matthew Graham : "Bond markets have gone from driving Camry's to driving Bentley's now. We still get a flat tire occasionally, but it doesn't mean we junk the car because of it. At the end of the day, awe're still driving a Bentley, and flat tires can be refilled."
Ira Selwin : "zing!"
Ted Rood : "You mean Euros, Adam?"
Adam Quinones : "unless you're trading with monopoly money."
Adam Quinones : "re: sad. It's pretty hard to have conviction in this environment."
Matthew Graham : "in other words, we're seeing small "tactical" swings in a much larger "strategic" repression that heavily favors risk aversion and exceptionally low rates. "
Adam Quinones : "Can't always think like a speculator when there are many more types of traders out there..."
Matthew Graham : "yes. because today's bounce back--the extent to which it has currently run--isn't about Philly Fed. All Europe. And I wouldn't think of it as a lack of conviction in positions as much as the best bet currently "staying nimble, going with the flow, and cashing in on small gains." More to your point on "did the market need to figure out we're not doing well," I think the fact that 10's are in the 1.6's, and held underneath an important technical level y'day even after th"
philip mancuso : "Did the market really need the Philly Fed to figure out we're in the sh*t. What's the point of the bounce or yesterdays sell off. I don't see that we've uncovered any relvations in the last 2 days. I just find the conviction these traders have in their positions sad. Frankly, I see the last 30-60 a big nothing. All stuff we already knew. maybe some of the Euro stuff aside. Am I crazy?"