Equities were one of the only places that bond markets were going to get any sort of guidance today given the fact that economic data is inconsequential and the President won't be back in the office until tomorrow. Before the stock market open, equities futures were treading water in slightly better territory versus Monday's levels, as were Treasuries/MBS. As soon as stocks failed to make any gains out of the gate, bond markets began improving tentatively as well, almost as if they were waiting for the all-clear before ratcheting up a few ticks. The stock slide began in earnest after 10am, helping 10yr yields fall another 1bp and MBS to add a few more ticks to the AM gains. As expected, the domestic session is seeing volumes just barely edge above levels from the 24th, but volume remains quite low compared to a non-holiday week.
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 11:03 AM EST
Morning Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts
and updates issued via email and text alert to MBS Live subscribers
Low Volume Gains Offsetting Low Volume Losses
Despite news that the President will end his holiday in Hawaii today and return to Fiscal Cliff negotiations, trading volumes aren't much higher than Monday. The very slightly negative bias in the Treasury complex on Monday has shifted to slightly positive bias today with 10's down about 1.5 bps to 1.76. Fannie 3.0s opened near the weak side of Monday's range and have since moved to the highs of the week, up 3 ticks from the previous close at 104-22.
Most of the similarities in volume between Monday and Today can be explained by overseas market holidays sapping volume in the overnight session. Last time it was Tokyo, this time, Europe. US markets have a full session ahead, so the domestic session volume should ultimately be a bit bigger today, but we can't emphasize enough how very little that means (in both cases, these are the thinnest holiday trading volumes in recent memory).
As discussed in this morning's Day Ahead
, markets were already expecting political leaders to trickle back into Washington today to either do some work on the Fiscal Cliff or simply strategize about how it'll be added to the list of New Year's resolutions. If anything, Obama's announcement that he's merely "departing" Hawaii today errs on the less aggressive side of expectations (as opposed to being back at the desk this morning, ready to go).
Perhaps that relatively less-aggressive approach to the Fiscal Cliff negotiations is having some slight positive effect for bond markets, but if given the choice between that and inconsequential, low-volume, sideways drifting, we'd choose the latter every time. The fact that it seems politicians will be doing some work ahead of the new year is good, but expected. Markets will need details before honoring Fiscal Cliff headlines with earnest, directional movement.
Also showing up on this morning's "not honored with earnest, directional movement" list is Case-Shiller Home Prices which improved on a seasonally adjusted basis. No discernible market reaction--no surprises. There's no other scheduled economic data for today, unless you count the Richmond Fed index at 10am (we don't). There is, however, a full day of equities trading which may turn out to offer some guidance later in the session, but so far, we're seeing the small amount of cash that got sidelined ahead of the 1.5 day break, merely filtering back into both sides of the market.
ECON: Case-Shiller Home Prices Slightly Better Than Expected
- Seasonally Adjusted 20 City +0.7 vs +0.5 Consensus
- Non-Adjusted 20 City -0.1 vs -0.2 Consensus
- No market impact
Data through October 2012, released today by S&P Dow Jones Indices for
its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed home prices rose
4.3% in the 12 months ending in October in the 20-City Composite, out-distancing analysts’ forecasts.
Anticipated seasonal weakness appeared as twelve of the 20 cities and both Composites posted monthly
declines in home prices in October.
The 10- and 20-City Composites recorded respective annual returns of +3.4% and +4.3% in October 2012 –
larger than the +2.1% and +3.0% annual rates posted for September 2012. In nineteen of the 20 cities, annual
returns in October were higher than September. Chicago and New York were the only two cities with negative
annual returns in October. Phoenix home prices rose for the 13th month in a row. San Diego was second best
with nine consecutive monthly gains.
Live Chat Featured Comments
Matthew Graham : ""Such a plan would likely reach no more than a few hundred thousand borrowers, or less than 5% of all outstanding mortgages. Some 24% of outstanding loans in privately issued mortgage bonds, representing around $226 billion in loans to about 900,000 borrowers, are current on their payments and underwater, according to estimates by analysts at Barclays Capital and J.P. Morgan Chase & Co.""
Andy Pada : "i guess what I'm saying is that a government loan is anything that they want it to be. The real question is whether there is political/ideological will to increase the role o the federal government in housing finance?"
Alan Craft : "I wonder how many loans or $ that represents?"
Ted Rood : "Anything not currently backed by Fannie/Freddie/FHA/VA/USDA I assume, Andy."
Andy Pada : "I guess the question is: what is a non-Government loan? I would think that the government can define what a "government/GSE loan" is?"
Daniel Kramer : "instead govt should put more pressure on lenders to modify/refi their own borrowers, but then again, why does EVERYONE deserve a refi? it sucks but everyone signed a contract, and needs to honor their word they will pay it back."
Daniel Kramer : "i am agianst goverment taking on non GSE loans. good for our buz, very badfor country"
Matthew Graham : "RTRS - US OCT 20-METRO AREA HOME PRICES -0.1 PCT NON-ADJUSTED (CONSENSUS -0.2) VS REVISED +0.2 PCT IN SEPT - S&P/CASE-SHILLER "
Matthew Graham : "RTRS - US OCTOBER HOME PRICES IN 20 METRO AREAS +0.7 PCT SEASONALLY ADJ (CONSENSUS +0.5) VS +0.4 PCT IN SEPTEMBER - S&P/CASE-SHILLER "
Scott Valins : "potential expansion of refi pool http://www.cnbc.com/id/100339374"