Thursday night and we've essentially seen the sideways range established last Thursday hold up in uneventful fashion for the entire week. A narrow range of 103-00 to 103-13 has encapsulated the entire week's worth of trading for Fannie 3.0s and most of the sessions have seen prices travel the better part of that range. After testing the low end yesterday, today opened up in slightly better territory and we worked our way up from 103-04 to once again hit the 103-13 level. The "sideways" theme was reinforced from that point on and there were a few harrying moments heading into the stock market close, but MBS found their footing and avoided major reprice risk. Tomorrow morning's Jackson Hole speech from Bernanke is in focus and then the 3-day Labor Day Weekend.
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
Late Day, Light Liquidity. MBS At Lowest Levels Since 9am
Negative reprice risk is potentially on the rise as bond markets lose steam into the afternoon. Volume and liquidity have dried up a fair bit and there's no material news or data driving the weakness. In other words, we wouldn't read anything into the move.
Fannie 3.0s are down to 103-09 after hitting highs of 103-13 earlier. Many lenders released rate sheets when prices were around 103-10. So in and of itself, the difference in prices doesn't justify a negative reprice, but some lenders may be concerned with the shape of the trend into the close and also be considering relatively higher volatility events tomorrow morning.
Current levels wouldn't suggest a ton of reprices, but we could see a lender or two come in soon unless things bounce back fairly quickly (which still looks possible at the moment). Additional risks if we fall from here, less risk if we bounce.
ECB to oversee all euro zone banks - report
The European Commission, the executive arm of the European Union, plans to give the European Central Bank oversight of all banks in the euro zone, German paper Sueddeutsche Zeitung reported, citing EU Commissioner Michel Barnier.
Under the plans, the ECB will oversee all banks that have tapped the European Stability Mechanism from January next year, all banks relevant to the financial system from July and all remaining banks from 2014, Barnier told the paper in an interview.
7yr Auction On The Screws, First Reaction Is No Reaction
MBS and Treasuries are broadly unchanged following an average and uneventful 7yr Treasury Auction. If markets are going to use this as any sort of jumping-off point to either move back to the highs of the day or break below intraday supportive levels, they have yet to give an indication one way or the other.
For MBS, that intraday supportive shelf sits at 103-09, just under current levels, but we have intermediate support at 103-07 as well. Recent highs of 103-13 were rejected earlier and sitting currently at 103-10, we're not exactly stampeding back toward them.
The best way we can think to characterize the auction and post auction trading would be an "absence of bad" as opposed to a clear presence of awesome. So far so good if supportive ledges hold. in terms of 10yr yields 1.6267 has been the modal ceiling for the past two hours. Continuing to hold under there is good.
Live Chat Featured Comments
Jeff Anderson : "REPRICE: 2:11 PM - Chase Better"
Brent Borcherding : "Justin, if you take a moment and look at the advanced charts (great tool the site provides) you may see something different."
Justin Harward : "This week's MBS theme seems to be open very strong and then settle down back to market open levels by the afternoon =/"
Scott Rieke : "Everyone can go back to sleep now"
Matthew Graham : "RTRS- US TREASURY - PRIMARY DEALERS TAKE $12.69 BLN OF 7-YEAR NOTES SALE, INDIRECT $11.12 BLN "
Matthew Graham : "RTRS- U.S. 7-YEAR NOTES BID-TO-COVER RATIO 2.80, NON-COMP BIDS $7.75 MLN "
Matthew Graham : "RTRS- U.S. SELLS $29 BLN 7-YEAR NOTES AT HIGH YIELD 1.081 PCT, AWARDS 33.82 PCT OF BIDS AT HIGH "
Matthew Graham : "1pm WI - 1.085"
Matthew Graham : "7 yr Auction coming up. Recent average BTC 2.73, but last two were both 2.64. Last 3 auctions at higher yields than 1pm when-issued. Refresher on terminology if needed: http://www.mortgagenewsdaily.com/mortgage_rates/blog/242898.aspx"
Tom Bartlett : "if you get an answer JT..please let me know. I have 2 that got hung up prior to committment."
Jerry T : "Just got this from the USDA. Does this mean that REFI apps will now be given Conditional Commitments? Or does it mean only after Oct. 1? REFINANCE LOANS:
Due to increased interest in the refinance feature of the SFHGLP, refinance funding was
exhausted on August 21, 2012. Effective immediately, Rural Development will issue
Conditional Commitments subject to the availability of Congressionally appropriated funds.
The FY 2013 upfront guarantee fee of 2 p"
Roger Moore : "very odd"
Roger Moore : "nycb does that"
Thomas Nelson : "One investor has an odd relock policy.....It is the difference between the day it expires and the new lock date......nothing to do with what the original was locked at........ALOT of files are expriring tonight."
Scott Rieke : "Buy the rumor - sell the news"
Thomas Nelson : "9am central original pricing.....do you think the anticiapation of tomorrow is being built in?"
Matthew Graham : "maybe I should stop talking about it tho... prices seem to not like the discussion"
Matthew Graham : "given that we were 103-09 / 103-10 at rate sheet time, I'm not seeing much room"
Matthew Graham : "plus, I'd guess that they're at least somewhat cognizant of the 103-13 uber ceiling in Fannie 3.0s"
Matthew Graham : "only a few lenders reprice in such situations"
Matthew Graham : "Depends on how keen a lender is to reprice on being just a few ticks higher than raate sheet time."
Thomas Nelson : "Sorry to interrupt your discussion. MG are there any numbers we should be watching today for reprices? A bunch of new files have come up in the last 2 days....trying to get some guidance."