Long time readers of the commentary will know that we're not big fans of long term moving averages as short-term indications of changing trends. They're most useful in retrospect and sometimes not at all. In retrospect then, it's interesting and perhaps even useful to note that the last 6 days were spent OVER the 100 day moving average in 10yr yields. If that particular moving average could cast a vote as to the impending direction of markets, until yesterday, it would have been firmly in favor of higher rates. But yesterday's post-FOMC rally called that into serious question, breaking back below the 100 day average, and now today's trading has remained under it exclusively. If we were keen on using such things as short term indicators we'd say "Bounce back confirmed!" But alas... all we can really confirm is the rejection of a break above 1.86 in 10yr yields and the fact that tradeflows settled into a well-balanced groove upon reaching the critical long-term pivot points of 1.67 today in 10yr yields and 103-10 in Fannie 3.0s. Next big events on the calendar are in early September, and while the recent bounce suggests sideways movement from here, it doesn't speak to the degree of volatility we might see in the process.
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 4:03 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
Clearly Coasting Upon Finding The Coast To Be Clear
Even though overnight and morning trading has shown the coast to be relatively clear as far as validating yesterday's post-FOMC moves, the fix looks to be in for today. That is to say that yesterday's positivity is confirmed, and upon that confirmation, bond markets are just sort of grinding it out in a sideways pattern, albeit at much better levels.
Earlier, a huge block trade--assumed to be a seller--of Five Year Notes went through and coaxed longer-dated bond markets just slightly higher in yield, though we'd not that volume was dissipating at the time. It briefly looked like MBS and/or Treasuries might be put on their back foot by European headlines, but the sideways "coasting" proved to be the more powerful trend than that of "headline chasing."
This is really excellent behavior and does much to confirm our reentry into the June-early August trend that saw high yields of 1.67-1.72.
For their part, MBS are just 1 tick on the sunny side of a long-term pivot at 103-10 (really, there are several price levels composing this pivot point, ranging from 103-07 to 103-10. That's the line. Just use a thicker than normal market when drawing it). That's Fannie 3.0s by the way... They're all the rage again, what with the bounce back from the cliffs of insanity one short week ago.
Positive reprices? Sure, why not... Prices were still ramping up a bit into rate sheet time, and we've had excellent stability since then. Reprices are justified in many cases, and indeed we've seen a few of these "stability reprices." But justification and reality may vary depending on the lender.
Live Chat Featured Comments
Mike Drews : "Think about how many deals you all thought you lost when rates went up...just don't get greedy."
Jon : "Until 9/13? Hold out for another day of re-prices for the better, lock my entire Pipeline and then talk about sports on MND Live for the next two weeks."
Matthew Graham : "GDP is more for the evening news IMO. Fed's focused on timely and relevant employment data, mainly. NFP's continue to be the biggie. Employment components of national and regional manufacturing surveys... Claims (kinda...), maybe ADP, JOLTS, and other ancillary reports, but by their 9/13 announcement, they'll have the next NFP data, and several European events in the books. Should be the most accuracy yet as to markets being able to predict whether or not the Fed breaks out something new in "
Ted Rood : "GDP, that is"
Ted Rood : "Does it count as acceleration if GNP is falling off a cliff?"
Matthew Graham : "positive money flow on flat pricing since 9am seems to indicate both long and short positions entering, so there's good balance (or indecision, if you prefer) at current levels. 1.67+, previous long-standing all-time low and epic pivot point... go figure... I think the biggest question on a lot of minds is "ok... so... what do we do between now and Sept 13th?""
Matthew Graham : "I wouldn't expect much by way of organic reaction to any domestic data other than NFP and the other few biggies (retail sales obviously nominated itself last week)... Like I said this AM, burden of proof is on the data now to prove "acceleration" of the recovery. Durable Goods doesn't have the cojones for such things, at least not that I've seen in the past year. Sure... a BIG beat could cause some volatility, but the big sweeping movements that force us to reconsider ranges and trends look t"
Jon : "Assuming estimates are correct and DG report tmrw is strong, how do we expect the market to react after the past few days of momentum and positive breakouts?"
Adam Dahill : "I locked a bunch before it got really hairy last week but it's nice that we are backin business"
Chris Kopec : "Adam.....looking at that deal by deal. We're re-entering territory to breathe life into old quotes....if you can make your comp number, no reason to float in my opinion. But that's just me."
Chip Harris : "I'm locking what I can. I am a broker though, so my comp can't change."
Jon : "Blowing on the dice now..."
Blair : "pressing until tomorrow. we just got an email that we're getting an internal improvement to get a lot of these floating deals locked in."
Matt Hodges : "no whammies"
Adam Dahill : "who's locking and who's pressing their luck?? "
Matthew Graham : "REPRICE: 2:12 PM - Sun West Mortgage Better"
Victor Burek : "even if we move sideways from here..pricing can and should improve"
Victor Burek : "REPRICE: 1:44 PM - Nexbank Better"
Ira Selwin : "Wells memo from 3/22/10: RESPA Regulation requires that any Good Faith Estimate (GFE) re-disclosed as a result of a valid Changed Circumstance be received by the borrower “prior to closing.” RESPA does not further define a time frame for “prior to closing”. Wells Fargo considers “prior to closing” to mean no less than one (1) day prior to closing, which gives the borrower a reasonable amount of time to review the changes on the GFE and make an informed decision. As a result, effective with loan "
Ira Selwin : "GFE has to be issued day before it closed"
Victor Burek : "you need a final gfe with correct loan amount..but no waiting period unless apr changes"
Jason York : "so if the loan amount changes, but the APR doesn't, then I am fine, correct?"
Jason Adams : "APR increases by 1/8 you have to redisclose"
Jason York : "if a loan amount increases a little bit, but no fees do, do you have to redisclose a new GFE, and if so, how many days prior to closing?"
Matthew Graham : "I asked my 5 year old what was wrong with that statement, and he said, "time is money dad""
Matthew Graham : "Samaras says Greece wants Time, not Money."
Brent Borcherding : "This time they promise, Matt."
Matt Hodges : "did RTRS report if she she said this with a straight face?"
Matt Hodges : ""continue its reform path"? what? they blatantly evade taxes, they elect new parliament and leaders every few months and everyone knows they will continue to default"
Matthew Graham : "RTRS - MERKEL SAYS IT IS IMPORTANT TO WAIT FOR TROIKA REPORT AND SEE WHAT ITS RESULTS ARE "
Matthew Graham : "RTRS- GERMAN CHANCELLOR MERKEL SAYS SHE WILL ENCOURAGE GREECE TO CONTINUE ITS REFORM PATH "
Matthew Graham : "RTRS- GERMAN CHANCELLOR MERKEL SAYS WILL DISCUSS WITH HOLLANDE DECISIONS ON BANKING SUPERVISION AND GREECE "
Tom Schwab : "REPRICE: 1:03 PM - AMC Better"
Eric Franson : "REPRICE: 12:53 PM - Wells Fargo Better"
Matthew Graham : "No major departures from that which was already known/assumed, but helps flesh out the timeline. Euro spiked (minor) on the news about half an hour ago"
Matthew Graham : "RTRS - SPAIN'S STATE-RESCUED BANKS UNLIKELY TO RECEIVE EMERGENCY LIQUIDITY LINE BEFORE END SEPTEMBER-SOURCES "
Matthew Graham : "RTRS - NO DECISION EXPECTED BEFORE SEPT. 12 AT SOONEST, POLITICAL NEGOTIATIONS TO INTENSIFY ON SEPT 14/15 WHEN EUROPEAN FINANCE MINISTERS MEET-SOURCES "
Matthew Graham : "RTRS - SPAIN IN TALKS WITH EURO ZONE OVER TERMS OF SOVEREIGN AID, THREE SOURCES FAMILIAR WITH THE DISCUSSIONS SAY "