Volumes are finally creeping higher than the eerily slow first two days of the week and things have generally been positive for MBS. In fact, Fannie 3.0s are more than a quarter of a point improved from yesterday's close as money flows into both sides of the market. In other words, stocks are at two day highs and 10yr yields are near their lowest levels since last week's FOMC day. The morning's data was mixed in terms of it's implications for bond markets, but as expected, it has been largely disregarded in favor of tradeflows and technicals. MBS have hooked back up with Treasuries to a much greater extent than the in the immediate wake of the QE3 announcement, and 10's just faced a moderately important short terms decision with respect to two competing trends that collided today. Bulls won out and bond markets improved but seem unsure of their next move. As such we've just been leaking very slowly lower in price since hitting highs around 9am.
MBS Pricing Snapshot
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Pricing as of 11:07 AM EST
Morning Reprice Alerts and Updates
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ECON: August Existing-Home Sales and Prices Rise
- 4.82 mln unit annual rate vs 4.55 mln consensus
- Highest since May 2010
- Inventory 2.47 mln units vs 2.4 mln in July
- 22 pct distressed vs 24 pct in July
- Median price +9.5 pct Year over Year.
Existing-home sales continued to improve in August and the national median price rose on a year-over-year basis for the sixth straight month, according to the National Association of Realtors.
Total existing-home sales 1 , which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 7.8 percent to a seasonally adjusted annual rate of 4.82 million in August from 4.47 million in July, and are 9.3 percent higher than the 4.41 million-unit level in August 2011.
Lawrence Yun , NAR chief economist, said favorable buying conditions get the credit. "The housing market is steadily recovering with consistent increases in both home sales and median prices. More buyers are taking advantage of excellent housing affordability conditions," he said. "Inventories in many parts of the country are broadly balanced, favoring neither sellers nor buyers. However, the West and Florida markets are experiencing inventory shortages, which are placing pressure on prices."
Bond Market Steady At Stronger Levels Following Housing Starts
Treasury yields and risk markets were initially higher in the overnight session after the Bank of Japan expanded it's existing quantitative easing program by ¥80 trillion ($127 bln) and doing away with it's minimum 0.1 pct bidding yield for purchases of long term government bonds. 10yr yields moved roughly 3 bps higher on the news but along with stock futures, moved flat from there before reversing course into the European session.
German Bunds led the charge back to lower yields after a much stronger than expected auction of shorter term German debt. 10yr Treasuries hit the 8am open at 1.79 and have shed another tick since a slightly weaker than expected Housing starts report.
Fannie 3.0s started out in a narrow range near yesterday's highs, but have extended gains over the past few minutes, taking them 10 ticks higher from yesterday's close at 104-14. These are the highest prices seen since 3.0s were on the way down after hitting all-time highs last Friday.
The only other scheduled data of the morning hits in about an hour with Existing Home Sales. Consensus calls for a 4.55 mln annual rate vs 4.47 mln last month. This would equate to a 2.0 pct gain.
ECON: Housing Starts Miss Consensus, But Single-Family Rises
Quick Notes: Headline Starts +2.3, at a 750k annual rate. Consensus was for 765k, and July was revised down from 746k to 733k. Permits fell 1 pct to an 803k annual rate vs a 796k forecast. Single family starts rose 5.5 pct to 535k annual rate (highest since 4/2010)
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 803,000. This is
1.0 percent (±1.2%)* below the revised July rate of 811,000, but is 24.5 percent (±1.7%) above the August 2011 estimate of 645,000.
Single-family authorizations in August were at a rate of 512,000; this is 0.2 percent (±0.8%)* above the revised July figure of 511,000.
Authorizations of units in buildings with five units or more were at a rate of 263,000 in August.
Privately-owned housing starts in August were at a seasonally adjusted annual rate of 750,000. This is 2.3 percent (±10.2%)* above the
revised July estimate of 733,000 and is 29.1 percent (±12.8%) above the August 2011 rate of 581,000.
Single-family housing starts in August were at a rate of 535,000; this is 5.5 percent (±10.4%)* above the revised July figure of 507,000.
The August rate for units in buildings with five units or more was 208,000.
Privately-owned housing completions in August were at a seasonally adjusted annual rate of 689,000. This is 0.7 percent (±18.8%)*
above the revised July estimate of 684,000 and is 11.7 percent (±17.5%)* above the August 2011 rate of 617,000.
Single-family housing completions in August were at a rate of 489,000; this is 5.4 percent (±14.3%)* above the revised July rate of
464,000. The August rate for units in buildings with five units or more was 193,000.
Live Chat Featured Comments
Matthew Graham : "RTRS- US NAR SAYS 22 PCT OF U.S. AUG EXISTING HOME SALES WERE DISTRESSED SALES VERSUS 24 PCT IN JULY "
Matthew Graham : "RTRS - US AUG EXISTING HOME SALES +7.8 PCT VS JULY +2.3 PCT (PREV +2.3 PCT)-NAR "
Matthew Graham : "RTRS - US AUG EXISTING HOME SALES 4.82 MLN UNIT ANNUAL RATE, HIGHEST SINCE MAY 2010 (CONS 4.55 MLN) VS JULY 4.47 MLN (PREV 4.47 MLN)-NAR"
Matthew Graham : "Here ya go JA: http://screencast.com/t/QbQgxL9NESs Total range is 2 standard deviations with about .75 being above the regression line and 1.25 below. So we're just on the higher end of the mid-point of the trend, but not through to the levels that would be suggested as unsustainable from 9/13 and 9/14"
Matthew Graham : "intermediate term underlying uptrend since 8/23 with a few instances of breakouts on either side. Standby for a quick chart, or feel free to make your own on advanced charts"
Jeff Anderson : "Gm, MG. What are we looking at for pivot points in these somewhat uncharted waters? 104-08 to 104-10 seemed like a ceiling for a few days. Now hopefully a floor. What does the Captain see?"
B-C : "seems like the problem is the UW, not the gift"
Jason Zimmer : "yes, statements from the donor just like any other gift"
Jude Bridwell : "did you have to get something from the donor showing the funds there? Like I said, I have letters from each bank, but my u/w is just being a little difficult and not wanting to do it since it's something we don't see much. "
Jason Zimmer : "When the money comes into the account it will be in US dollars"
Jason Zimmer : "i've done both germany and canada"
Jude Bridwell : "Have a lady from Turkey(been here for two years) that is trying to buy a condo in Houston. Her mom is gifting her the 20% down as a wire from her mom's account in Turkey. Anyone know if foreign gifts are acceptable. Have letters from each bank showing Turkish dollar amt and US conversion rate. Checking with my investors. Thanks."
Matthew Graham : "RTRS- US AUG SINGLE-FAMILY PERMITS 512,000 UNIT RATE, HIGHEST SINCE MARCH 2010 "
Matthew Graham : "RTRS - US AUG SINGLE-FAMILY STARTS +5.5 PCT TO 535,000 UNIT RATE, HIGHEST SINCE APRIL 2010; MULTIFAMILY -4.9 PCT TO 215,000 UNIT RATE "
Matthew Graham : "RTRS- US AUG HOUSING PERMITS 803,000 UNIT RATE (CONSENSUS 796,000) VS JULY 811,000 UNIT RATE "
Matthew Graham : "RTRS - US AUG HOUSING PERMITS -1.0 PCT VS JULY +6.7 PCT "
Matthew Graham : "RTRS- US AUG HOUSING STARTS 750,000 UNIT RATE (CONSENSUS 765,000) VS JULY 733,000 (PREV 746,000) "
Matthew Graham : "RTRS - US AUG HOUSING STARTS +2.3 PCT VS JULY -2.8 PCT (PREV -1.1 PCT) "
Matthew Graham : "RTRS - REUTERS POLL-MEDIANS SHOW U.S. FEDERAL RESERVE SEEN SPENDING $800 BILLION ON QE3 ($600 BLN IN SEPT 14 POLL) "
Matthew Graham : "RTRS - REUTERS POLL-U.S. 10-YR T-NOTE YIELD SEEN AT 1.75 PCT IN 3-MONTHS, 1.91 PCT IN 6 MTHS, 2.18 PCT IN 1-YR (AUG POLL 1.72, 1.90, 2.20) "