Today was one of those trading sessions that had a more "incidental" feel to it, or perhaps it would be better characterized as "nominal." In other words, it was a trading session in name only--one that simply provided time to adjust positions before the 1.3 day Independence Day break with a busy day of data ahead on Thursday and NFP on Friday. Things could have gone either way, and today they were slightly weaker. Nothing behind it in this case.
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 3:22 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
Heading Into Weaker Levels. Reprice Risk Increases
Even though volume remains relatively low, and despite the fact that current movements aren't attributable to any headline causality, tradeflows continue to usher bond markets into progressively weaker territory ahead of the early 2pm close.
The most recent ratchet-like movement takes MBS into yesterday's pre-ISM trading range. This increases chances of negative reprices. Fannie 3.0's are down 6 ticks on the day at 102-25 and Fannie 3.5's are down 5 ticks at 105-09. Even at these levels, reprices won't be widespread, but they are a greater risk than the first bout of weakness about 2 hours earlier.
Treasuries Leading The Charge To The Weak Side, MBS Reluctantly Follow
Treasuries have been heading for the door in more ways than one since coming in this morning as 10yr yields have ticked neatly and rhythmically to higher highs and higher lows. Currently 10's are up 3bps on the day and while MBS have largely been able to resist the negativity, they're reluctantly following to enough of an extent that it brings Fannie 3s and 3.5s to their weakest levels of the day. The former is down 4 ticks at 102-28 and the latter down 3 ticks at 105-11.
We get the sense that bond markets in general are themselves, reluctantly following the rally in equities, but certainly trying to do more to stay flat than to sell-off. Volume remains light and the weakness continues to be more a factor of timing and flows than of the strong Factory Orders report this morning.
All that notwithstanding, it could result in elevated risks of negative reprices among a small group of fast-acting lenders, but we'd emphasize that losses are minimal and could be close to nil depending on the time frame of a particular lenders initial rate sheet.
Live Chat Featured Comments
Ken Crute : "full doc Jason "
john murphy : "JH: yep. same servicer MUST NOT run thru DU. just disclose and close. all manual UW, verify mtg payment 12 mo's, thats it. othewise doc to findings (diff svcr)."
Jason Harris : "Dumb question here but retail same servicer we have no income doc or ratio requirements on Harp...all wholesale options with different servicier require full doc...right?"
Andrew Russell : "traders are heading over to pier 81 for the BBQ and Macy's firework show..."
Mike Drews : "i'm assuming we're on auto pilot about now in super light volume?"
Andy Pada : "Thanks guys"
MMNJ : "Freedom as well"
Ira Selwin : "AFR, NXT, Pacific Union"
Ira Selwin : "Franklin single family only"
Clayton Sandy : "Chase, if you credit qualify "
Ira Selwin : "Chase, full credit w/o appraisal"
Andy Pada : "Other than Suntrust, who else is buying fha streamlines?"
Matthew Graham : "RTRS - ECB - IN EXCEPTIONAL CIRCUMSTANCES, BANKS SHOULD BE ALLOWED TO INCREASE USE OF OWN-USE GOVERNMENT-GUARANTEED BANK BONDS IN ECB LENDING OPERATIONS "