The lion's share of today's volume and movement in bond markets was seen in the first few hours of the domestic session. Weaker Retail sales gave us a noticeable boost, although 10yr yields were never able to make it any lower than 1.442, EXACTLY matching the previous all-time low from June 1. MBS were content to take baby steps into higher and higher territory into the afternoon, finally topping out just before 2pm at all time highs for August Fannie 3.0's (although we'll note that July 3.0's briefly made it one tick higher just before they were retired). 10yr Treasuries rose into the afternoon as liquidity dried up across the board, but limited supply-side pressure in MBS helped Fannie 3.0's hold a supportive ledge at 103-19 and kept reprice risk at bay.
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 4:04 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
10's Continue Grinding On All-Time Lows, MBS High And Sideways
Today is turning out to be one of the least volatile examples of "all-time" trading levels. Even as the Euro bounced higher at 8:30am Treasury yields continued lower. On numerous occasions now, 10yr yields have hit the previous all-time low of 1.442, but have yet to break any lower today, but neither have they risen above the 1.45's on the rebound.
MBS also continue to cut an excessively sideways range between 103-18 and 103-22 in Fannie 3.0s, benefiting from relatively lighter supply at the start of the week. Just as the steeper yield curve shows duration to be more in fashion for Treasuries, so too are the lower MBS coupons outperforming the higher.
As MBS prices in this neighborhood have persisted, 3.0's have very quickly unseated 3.5's as the dominant production coupon. Fannie 3.0's are currently up 10 ticks on the day at 103-21 and 3.5's are up 6 ticks at 105-28. 10's are down 4bps at 1.4504 and S&Ps are a few points weaker from 9:30am levels. Volume and news have wound down significantly and we're just in a "watch and react" mode for any market moving headlines or tradeflows.
On a final note, not every lender in the world may have been expecting the strong stable performance from MBS--at least not to the extent we've seen. As such, it wouldn't be out of the question to see a very small minority offer a "stability reprice" this afternoon, but we'd probably be slightly more surprised to see one than none.
Live Chat Featured Comments
john murphy : "Hey BB: as to your prior comment on retention v. selling and why would a bk or credit union do that, I've been holding 85% of production across all maturities. with cost of funds so low and invrestments (short) at 50bps, yuo can lock in some nice spreads by match-funding the asset at FHLB or hedging"
Brent Borcherding : "Why would they do that?"
Ken Crute : "i believe some are Brent, "
Brent Borcherding : "Are Credit Unions and/or banks actually funding Fannie and Freddie eligible loans but portfolioing them vs selling? "
Ted Rood : "Exactly.......love to "take it away" and hear the surprise in their voice when I do so."
John Paul Mulchay : "TR, "I understand Mr. Borrower. Perhaps we are just not going to be a good match for each other on your refinance...""
Justin Dudek : "you cant fill up on last week's gas prices. and locking loans is the same way "
Brett Boyke : "had a guy ask me this morning if I thought rates were going lower, and I had to laugh - how can you predict that. We are in uncharted territory"
Ted Rood : "Especially love it when they'er at 5.75% now, and want to quibble over 3.75% versus 3.625%, all the while paying 2% higher."
Ted Rood : "No, just love it when borrowers aren't happy no matter what the rate. If you offer them .25% below market, some want .5%. If you offer that, they want to wait and "see if it gets better"..."
Brent Borcherding : "Are you calling a bottom, here, Rood?"
Ted Rood : "Maybe she should wait until rates get to .5% below the lowest they've ever been.....or ever will be."
Justin Dudek : "a borrower told me she would only refi if its "one of those Obama deals". i was sick to my stomach, its a streamer "
Jeff Anderson : "C'mon blip."
Matthew Graham : "still have yet to get a blip under 1.442 in 10's...."