It was an on-again off-again morning for markets as a "risk-on" tone--at least to a small degree--coaxed bond yields and stock prices higher. But beginning with the weaker-than-expected Consumer Confidence numbers, markets shifted into "risk-off" mode, and have now swung back completely in the other direction as MBS head into the green just after 11am.
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 11:05 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
Losses Moderate As Expected Following Weak Confidence Report
With respect to the last brief update ahead of the Consumer Confidence report that said:
"Very likely, we're seeing a bit of a "lead off" ahead of the Consumer Confidence report with Treasuries and MBS ready to weaken further on a big beat, or bounce back into the middle of the range on a disappointing headline."
The latter is essentially what we're seeing now. It hasn't been a rousing, triumphant return to epic levels for MBS or Treasuries, but both are notably off their weakest levels after the lowest Consumer Confidence reading since January. Versus the consensus, however, it wasn't a horrible miss, and thus we're not seeing a major correction.
Fannie 3.0's down 5 ticks on the day now at 102-18 and 3.5's also down 4 at 105-03. 10yr yields back under 1.64, but only just. Stocks hesitated on selling more following the confidence numbers, but look more willing now, and that looks to be helping bond markets, or at the very least, coinciding with their renewed levity.
ECON: Consumer Confidence Lowest Since January
The Conference Board Consumer Confidence Index®, which had declined in May, fell further in June. The Index now stands at 62.0 (1985=100), down from 64.4 in May. The Expectations Index declined to 72.3 from 77.3. The Present Situation Index, however, increased to 46.6 from 44.9 last month.
The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was June 14.
Says Lynn Franco, Director of Economic Indicators at The Conference Board: "Consumer Confidence declined in June, the fourth consecutive moderate decline. Consumers were somewhat more positive about current conditions, but slightly more pessimistic about the short-term outlook. Income expectations, which had improved last month, declined in June. If this trend continues, spending may be restrained in the short-term. The improvement in the Present Situation Index, coupled with a moderate softening in consumer expectations, suggests there will be little change in the pace of economic activity in the near-term."
Decent Stock Market Open and Low Volume Pushing MBS Lower
Just a quick heads up on a bit of incremental weakness this morning. Bond markets did their characteristic mini range consolidation heading into the 9:30am cash open for stocks. Stocks opened higher and bond yields followed. At this point though, stocks have hit a ceiling while bond markets are looking less willing to quickly reverse the selling trend.
Very likely, we're seeing a bit of a "lead off" ahead of the Consumer Confidence report with Treasuries and MBS ready to weaken further on a big beat, or bounce back into the middle of the range on a disappointing headline. Fannie 3.0's are down 6 ticks at 102-16 and 3.5's are down 6 ticks at 105-01. 10yr yields briefly hit 1.65's and currently sit at 1.6485
Bond Markets Back To Weakest Overnight Levels After First Econ Data
Treasuries began the overnight session in slightly weaker territory and moved slightly higher in yield in the European session. Overall, things continued to be uneventful, ranges narrow, and volume low. 10yr yields hit 1.64 just before the domestic open and revisited it moment ago following the stronger-than-expected Case-Shiller data.
MBS opened slightly off yesterday's highs and have notched lower again after the data, but remain well inside yesterday's range with Fannie 3.0's currently down 5 ticks at 102-19 and Fannie 3.5's down 3 ticks at 105-03. So far, bond markets look "bouncy" in lieu of breaking into technically weaker territory.
The next data on tap arrives at 10am with Consumer Confidence. We don't see this afternoon's 2yr auction as causing much, if any, drama for production MBS, and indeed reserve the drama-causing roles either for data that's wildly different than the consensus, or unexpected Euro-headlines.
ECON: Case Shiller Home Prices Rise More Than Expected
* 20 City Index +0.7 (SA) vs +0.4 Consensus
* +1.3 (Not seasonally adjusted) vs +0.5 Consensus
New York, June 26, 2012 – Data through April 2012, released today by S&P Indices for its S&P/Case-
Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed that on average home prices
increased 1.3% in the month of April for both the 10- and 20-City Composites. This comes after seven
consecutive months of falling home prices as measured by both indices.
April’s data indicate that on an annual basis home prices fell by 2.2% for the 10-City Composite and by
1.9% for the 20-City Composites, versus April 2011. While still negative, this is an improvement over the
annual rates of -2.9% and -2.6% recorded for the month of March 2012. Both Composites and 18 of the 20
MSAs saw increases in annual returns in April compared to those published for March; only Detroit and
New York fared worse in April, posting annual returns of +1.2% and -3.8% respectively, falling below their
March returns of +3.9% and -3.0%. For the seventh consecutive month, Atlanta posted the only doubledigit
negative annual return at -17.0%, its 22nd consecutive month of negative annual returns. Ten of the 20
MSAs saw positive annual returns – Boston, Charlotte, Dallas, Denver, Detroit, Miami, Minneapolis,
Phoenix, Tampa and Washington D.C. No cities posted new lows in April 2012.
FHFA Reports Average Interests Rates for May 2012
The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased 17 basis points to 4.04 in May. These rates are calculated from the
FHFA’s Monthly Interest Rate Survey of purchase-money mortgages (see technical note). These results reflect loans closed during the May 25 - 31 period. Typically, the interest rate is determined 30 to 45 days before the loan is closed. Thus, the reported rates depict market conditions prevailing in mid- to late-April.
The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 3.78 percent in May, down 15 basis points from 3.93 percent in April. The effective interest rate, which reflects the amortization of initial fees and charges, was 3.91 percent in May, down 12 basis points from 3.91 percent in April.
Freddie Mac: Highlights and Volume Summary for May 2012
May 2012 Highlights:
-The total mortgage portfolio decreased at an annualized rate of 9.4% in May.
-Single-family refinance-loan purchase and guarantee volume was $22.1 billion in May, representing 72% of total mortgage portfolio purchases and issuances.
-Total number of loan modifications were 5,091 in May 2012 and 22,222 for the five months ended May 31, 2012.
-The aggregate unpaid principal balance (UPB) of our mortgage-related investments portfolio decreased by approximately $9.5 billion in May.
-Freddie Mac mortgage-related securities and other guarantee commitments decreased at an annualized rate of 9.7% in May.
-Our single-family seriously delinquent rate decreased from 3.51% in April to 3.50% in May. Our multifamily delinquency rate increased from 0.25% in April to 0.26% in May.
-The measure of our exposure to changes in portfolio market value (PMVS-L) averaged $148 million in May. Duration gap averaged 0 months.
-On September 6, 2008, the Director of the Federal Housing Finance Agency (FHFA) appointed FHFA as Conservator of Freddie Mac.
Live Chat Featured Comments
Victor Burek : "and if Germany doesnt want it..not gonna happen"
Brent Borcherding : "Same story, the only solution they produce is one Germany seems very firm in their stance against."
Matthew Graham : "a bit of deductive reasoning applied to those three headlines and the Euro got a bit queasy "
Matthew Graham : "RTRS - ITALY PM MONTI SAYS EUROPE NEEDS MECHANISM TO LIMIT SPREADS WIDENING FOR COUNTRIES THAT RESPECT PUBLIC FINANCE RULES"
Matthew Graham : "RTRS - ITALY PM MONTI SAYS TO SEND LETTER TO EU AUTHORITIES ON WEDNESDAY EXPLAINING PROGRESS OF ITALIAN REFORMS "
Matthew Graham : "RTRS - ITALY PM MONTI SAYS JOINT EUROPEAN SOLUTIONS NEEDED TO PREVENT SOME COUNTRIES FALLING INTO RECESSION SPIRAL "
Matthew Graham : "last little blip lower in yield higher in price on some headlines from Italian Prime Minister Monti that hint at the push for additional "risk sharing" in Europe. "
Aaron Buyside Meyer : "I spoke with someone yesterday who has not made a mtg payment in 18 months and no lis pendens has been filed by Ocwen yet"
Brent Borcherding : "I'd agree."
Matthew Graham : "estimate of that which is not reflected in official supply tallies, either due to sampling methods, late-stage delinquency all-but-guaranteed to enter the pool of supply, or lenders sitting on vacant properties not yet foreclosed, short-sold, or deed-in-lieu'd, or ? "
Chris Kopec : "Interesting article on Freddie Mac here..... http://www.bloomberg.com/news/2012-06-26/bond-traders-shunning-freddie-costs-taxpayers-mortgages.html"
Brent Borcherding : "What is your definition of shadow inventory?"
Joel Marks : "Multiple offers throughout the Bay Area. Lots of all cash. Doing several "delayed purchases" where they buy in cash and refi day after closing to get mostly paid back. "
Matthew Graham : "RTRS - CONFERENCE BOARD CONSUMER CONFIDENCE INDEX AT LOWEST SINCE JANUARY "
Matthew Graham : "RTRS - US CONSUMER EXPECTATIONS INDEX 72.3 IN JUNE VS MAY REVISED 77.3 (PREVIOUS 77.6) - CONFERENCE BOARD "
Matthew Graham : "RTRS - US JUNE CONSUMER CONFIDENCE INDEX 62.0 (CONSENSUS 63.5) VS MAY REVISED 64.4 (PREVIOUS 64.9) - CONFERENCE BOARD "
Justin Bayle : "I had clients write an offer at $1.2M on a $949k listing (large historic home) and we knew we would have an appraisal problem. The sellers accepted another 1.2 offer that was putting $900k down so there was no appraisal contingency"
John Paul Mulchay : "law change in NV has caused a sharp decrease in inventory. Something like a 15 day supply for under 200k homes, multiple offers, buyers agreeing to pay difference between appraised value and sales price if necessary. "
Justin Bayle : "Mostly yes, but the outliers who can't appraise are getting covered by cash so it doesn't matter"
Jason Zimmer : "JB...are homes appraising OK?"
Justin Bayle : "Northeast LA or NELA as its called, is on fire with buyers. All desirable homes go in multiple offers. One that I know of got 75 offers. It's driving prices up in this entry level area"
Ken Crute : "deals are out there right now "
Andrew Horowitz : "they better be busy now, the spring season has historically been the busiest season for them"
Adam Quinones : "talking to realtors a bit more?"
Adam Quinones : "how you guys feeling about housing headlines lately?"
Matthew Graham : "RTRS - US APRIL 20-METRO AREA HOME PRICES -1.9 PCT (CONSENSUS -2.5 PCT) FROM YEAR AGO -- CASE-SHILLER "
Matthew Graham : "RTRS - US APRIL 20-METRO AREA HOME PRICES NON-ADJUSTED +1.3 PCT (CONSENSUS +0.5) VS 0.0 PCT IN MARCH-S&P/CASE-SHILLER "
Matthew Graham : "RTRS - US APRIL HOME PRICES IN 20 METRO AREAS +0.7 PCT SEASONALLY ADJ (CONSENSUS +0.4) VS REVISED +0.7 IN MARCH- S&P/CASE-SHILLER "
Dean Gorenflo : "...dear lord"
Matt Hodges : "anyone see the "expert" on CNBC reporting that you must put down 20%, while several years back you only needed to put down 5%, and that could come from credit card advance?"
MMNJ : "I think HARP has helped a lot more than loan mods....if you put together a ratio, for every HARP loan that we as mortgage originators closed, how many mods were consummated by the current servicer. I think if we put together that # the mods would look pathetic in comparison"
Andy Pada : "Not sure I agree. I think we will look back at these past few years and recognize how HARP and HAMP prevented us from a permanent cultural shift on housing."
MMNJ : "if you look at the avg modification #s, for the 5 months ended that is an average of 88 modifications per state (and for last month was an avg of 101 modifications per state)......and they said the loan mod program wouldn't work.....:)"
Matthew Graham : "RTRS - FREDDIE MAC- MULTIFAMILY DELINQUENCY RATE INCREASED FROM 0.25% IN APRIL TO 0.26% IN MAY "
Matthew Graham : "RTRS - FREDDIE MAC-AGGREGATE UNPAID PRINCIPAL BALANCE (UPB) OF MORTGAGE-RELATED INVESTMENTS PORTFOLIO DECREASED BY $9.5 BILLION IN MAY "
Matthew Graham : "RTRS- FREDDIE MAC-NUMBER OF LOAN MODIFICATIONS WERE 5,091 IN MAY 2012 AND 22,222 FOR THE FIVE MONTHS ENDED MAY 31, 2012 "
Matthew Graham : "RTRS - THE TOTAL MORTGAGE PORTFOLIO DECREASED AT AN ANNUALIZED RATE OF 9.4% IN MAY "
Matthew Graham : "RTRS - FREDDIE MAC ISSUES MONTHLY VOLUME SUMMARY FOR MAY 2012 "