In broad terms, bond markets continue to move roughly in concert with equities markets, but it's worth noting that Treasuries and MBS didn't move much at all after leveling off into the domestic session. Although 10yr yields were generally moving higher and lower when stocks moved higher or lower respectively, the movement on Treasuries' side was infinitesimally small by comparison. Bond markets were basically flat from 9am through the 11am Fed "Twist" buyback in 25-30yr maturities. The post-POMO volatility (POMO = Permanent Open Market Operation, aka "Fed Twist Buying") is evident in the out-of-the-blue drop of nearly 2 bps in 10yr yields right at 11:00am. This isn't uncommon following POMO's and especially unsurprising on a day without any news or data. MBS only gave a small amount of chase and both sides of the market appear to be heading back toward more neutral territory following the initial mini-rally.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
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Pricing as of 11:06 AM EST
Morning Reprice Alerts and Updates
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Bond Markets Looking For Guidance, Finding Some From Equities
Even before the day began, it stood out as a barren wasteland in terms of scheduled data and potential market movers. So far that has clearly turned out to be the case with nary a salient market mover in sight.
On days like this, if big trades don't get snowball selling/buying rolling in either direction, bond markets can either turn to the technical landscape (trading based on price patterns rather than news/data) or get risk-on/risk-off guidance from stocks. Both of these "backup motivators" seem to be in play this morning with Treasuries continuing a pattern of consolidation between late November highs and lows.
As far as being tuned into stock markets, we'd simply note that both stock prices and Treasury yields hit their lows of the morning at 9:15 and that Treasury yields moved higher with stock prices after the 9:30am "cash" open. MBS were doing their own version of "follow the leader," essentially mirroring and matching Treasuries.
As such, there was a barely detectable bit of weakness for MBS just after 9:30am, but it didn't gain any momentum. MBS firmed up and Treasury yields returned lower after stocks met some overhead resistance following their gains out of the gate. We might continue to watch for ongoing correlations between equities and bond markets, as well as keep an eye on technical trading levels.
In general, guidance givers continue to be in short supply until/unless we get a big, unexpected piece of news. So far so good in that regard. Fannie 3.0s are currently up 2 ticks on the day at 105-10 while 10yr yields are just under 1bp lower at 1.6130.
Live Chat Featured Comments
Matthew Graham : "RTRS - MOYNIHAN: "WE ARE NOT DOING THE JOB WE NEED IN MORTGAGE YET" BUT "WE ARE GROWING THAT BUSINESS" "
Matthew Graham : "RTRS- MOYNIHAN: THE BANK'S MORTGAGE SERVICING COSTS SHOULD RETURN TO NORMAL BY MIDDLE OF 2015 "
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Brent Borcherding : "Not confirmation, it just references that they attempted to get into banking a few years ago."
Matthew Graham : "link"
Matthew Graham : "that link does not indicate that walmart is launching a mortgage service"
Jason Anker : "** was alse here yesterday... TY MG"
Matthew Graham : "http://www.mortgagenewsdaily.com/12032012_mortgage_originations.asp"
Victor Burek : "quick google shows 1 in 3 americans woudl consider getting a mortgage from them"
Jason Anker : "Walmart is launching a Mortgage service - yes. Was on NPR last week. "
Matt Hodges : "this will be a good day to originate"
Ira Selwin : "Nothing - Slow calendar day - "