Treasuries put in a better performance than MBS today, thanks to the "flight-to-safety" nature of this morning's rally. As expected, economic data did next to nothing to move markets that were instead waiting to pounce on the first Fiscal Cliff headlines of the week. Those headlines hit frustratingly close to the 10am economic data slot. If you missed them, it would have looked like Consumer Confidence sent MBS a quarter of a point higher, when in fact, it was Harry Reid's remarks that it looked like we're headed off the Fiscal Cliff. Later in the session, some of the "risk-off" movement was reversed after news circulated that the House would reconvene on Sunday night at 6:30pm. Even after the bounce back ran its course, Treasuries easily maintained healthy gains versus yesterday whereas MBS struggled to bounce at yesterday's highs.
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 4:04 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
Negative Reprice Risk Picking Up As Flight-to-Safety Reverses
Around noon, news hit that the House would reconvene on Sunday at 6:30pm. In and of itself, the headline doesn't appear to say much, but considering that much of today's bond market rally was predicated on Harry Reid referring to going over the Fiscal Cliff by saying "Looks like [that's] where we're headed," it stands to reason that some of that flight-to-safety should be unwound if congress is getting together on a Sunday night in late December.
Stocks have taken the news and ran with it while Treasuries and MBS generally did a good job of fighting off the risk reversal at first. At this point, it looks like that admirable display of ground-holding is starting to get a bit shaky as MBS test their lowest levels since before Reid's initial comments at 10am.
Whereas positive reprices were more likely an hour ago, negative reprices are more likely now. Fannie 3.0s are down to 104-24 from 104-29 highs--not a huge move considering we're still 2 ticks higher on the day, but it may be enough for several lenders to already be planning on negative reprices if prices can't immediately find a reason to bounce back above 104-25. Bottom line, negative reprices aren't guaranteed, but they're now more likely than positive reprices and that will continue to be the case at 104-25 or below.
Fiscal Cliff Rumor Mill Churning, Positive Reprices Trickle In
Treasury yields and Stocks have continued a mostly downward trajectory following the morning's first major Fiscal Cliff headline from Harry Reid. Since then, there has been a small barrage of Cliffy rumors, but the lack of clarity has ultimately benefited bond markets.
Fannie 3.0 MBS continue to grind against the same 104-29 high that began at 11am, and positive reprices have started trickling in. As MBS continue to hold or improve upon these levels, reprices continue to be possible.
As for the Cliff headlines, Senator Scott Brown's Facebook page indicated that he'd "just learned the Pres. reached out to Senate GOP leadership with a proposal. It is the first such proposal to be put forth."
CNN added that Obama told Mitch McConnell that he'd send the Senate a scaled-back proposal, ostensibly corroborating Brown's Facebook page, but shortly thereafter, John Harwood (CNBC) said via Twitter:
"Sr. WH official tells me that, contrary to reports from Repubs, president will NOT be sending a fiscal cliff proposal to Capitol Hill."
Live Chat Featured Comments
Jeff Anderson : "REPRICE: 1:46 PM - Chase Better"
Paul Carlin : "My lock desk just told me wells is in a price change right now, "
Jim Begley : "REPRICE: 1:40 PM - Suntrust Better"
Nate Miller : "REPRICE: 1:39 PM - Caliber Funding Better"
Jim Leonard : "REPRICE: 1:24 PM - Sierra Pacific Better"
Rob Clark : "30 year fixed only."
Rob Clark : "REPRICE: 1:21 PM - Provident Funding Better"
Matthew Graham : "REPRICE: 1:15 PM - Plaza Better"
Michael Mitchell : "It tells me to contact my Rep and my manager. My Rep who has moved to Nationstar and the manager who is now at Plaza"
Michael Mitchell : "Curt I have a EPO letter from Wells myself"
Curt Sandfort : "just received an EPO letter from Wells, client refi'd 169 days later with someone else, they want 130 bps of their loan amount since he paid off within 180 days"
Michael Kelleher : "REPRICE: 11:55 AM - Franklin American Better"
BVG : "MBS are rockin--- must be something in the air"
Steve Chizmadia : "105 here we come"