MBS and Treasury prices have been cliff-diving due to the Fiscal Cliff. This isn't because bond markets are worried about going over the Fiscal Cliff, but rather, because the tone out of Washington has increasingly shifted toward comprise since this weekend--a fact that's been beneficial for stocks and detrimental for bonds. After Rep. Cantor said today that the House could be voting on a GOP tax-plan as early as this week, stock prices and bond yields were off to the races with Treasuries and MBS ultimately hitting their weakest levels since late October. As expected, economic data was disregarded in favor of Cliff-watching and the parade of mostly conciliatory sound-bytes from politicians did not disappoint. In fact, there's a downright consistent underlying message that the two sides are taking baby steps towards each other, and apparently this scares the crap out of bond markets. As far as benchmarks for the sell-off are concerned, with 10yr yields up over 1.83 earlier today and Fannie 3.0s hitting 104-04, we've already arrived at the tamer targets, and this is BEFORE any sort of Cliff deal has been announced. That seems to suggest that things would have to get even worse before they get materially better, and we can only hope that this conclusion is too obvious for markets to adhere to it.
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
After Bouncing Along Lows, MBS Forced To Sell. Reprice Risk
Yesterday's session has some bearing on today's in terms of the interplay between Treasuries and MBS. Yesterday saw MBS do a decent job of holding sideways against a rising tide of Treasury selling, only to capitulate to the weakness in the afternoon. Today was a bit more connected at first, but the same themes have been playing out since the auction with MBS grinding against a price floor while Treasuries explore higher yields.
And just like yesterday, we look to be very much at risk of being forced to capitulate to that weakness. As this is being typed, in fact, we're currently breaking into those lows, with Fannie 3.0s just having dipped to 104-06 for the first time today.
While 104-06 is only a quarter of a point weaker than yesterday's latest prices, and while lenders are fairly well positioned for such weakness with morning sheets, the selling trend incrementally increases negative reprice risk among lenders who haven't already repriced and whose first rate sheets were out before 10:30am.
Live Chat Featured Comments
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Nate Miller : "REPRICE: 11:53 AM - Caliber Funding Worse"