NOTE: Bond markets will be closed on Monday in observance of Martin Luther King Jr. Day. Scheduled MBS Commentary will resume on Tuesday morning.
Today served the purpose we were hoping to see it serve. Volume fell, prices rose, and we were left with the sense that Thursday was in fact the last day of the current week in terms of "active" trading and participation. This makes Thursday's sell-off nominally more palatable in that we can infer an extra bit of defensiveness ahead of an extended weekend. Whether or not this actually had a bearing on yesterday's weakness, today's moderate bounce back leaves the recent countertrends intact. In other words, there are long term trends leading toward higher rates. The boundaries of those were stretched to the limit earlier this month and we've since been trending back toward lower rates, with yesterday's sell-off stretching that counter-trend to its own limits. No breakouts though. Broader suggestion is for choppy, sideways indecision to continue into debt-ceiling debate.
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 4:05 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
Positive Reprice Potential Vs. Conservative Friday Stances
As we often discuss, lenders tend to be a bit more hesitant to offer positive reprices on Friday afternoon gains, especially before 3-day weekends, especially when the gains are only 3-5 ticks. All these things and more today as Fannie 3.0s edge up 4 ticks from opening levels (9 ticks day-over-day) into the noon hour.
10yr yields are down to 1.8381, just edging below yesterday's opening levels. Yesterday's nasty little sell-off is effectively undone, at least for now, and it currently stands as yet another instance of bond markets following stocks during earning's season (especially during domestic hours), but giving up less relative ground than the stock rally suggests.
Case in point, S&P futures at 1468 lined up with 10yr yields at 1.842 yesterday morning, but now 10yr yields are back below 1.84 despite S&Ps only having fallen to 1472 from 1480 highs yesterday. Lots of numbers just now, but the point is that stocks and bonds are following each other a fair bit minute-to-minute, but day over day, bond yields have been able to move lower vs stock prices. NOTE: this could be nothing more than money simply flowing back into both sides of the market as a new year of trading picks up, but the trend is net-positive just the same.
Back to business though... Reprices... Are they Possible? In a word, yes. It's just that they're less likely than they otherwise would be. The longer that current levels are maintained or improved upon, the more possible they'd become, but some lenders have probably already tuned any gains out for the day. Warning bells would be set for sell-offs, but otherwise, the 3-day weekend will start early for some.
Live Chat Featured Comments
Matthew Graham : "REPRICE: 1:21 PM - Plaza Better"
Matthew Graham : "RTRS- CANTOR SAYS THE THREE-MONTH DEBT LIMIT EXTENSION WILL GIVE SENATE TIME TO PASS BUDGET"
Matthew Graham : "RTRS- HOUSE MAJORITY LEADER CANTOR SAYS HOUSE TO AUTHORIZE BILL NEXT WEEK TO EXTEND DEBT LIMIT BY THREE MONTHS "
Andy Pada : "VB, I think I actually agree 100% with you on this one."
Victor Burek : "and raise everyones taxes 1%, but make sure everyone pays at least someting...go many pay no fed income taxes"
Victor Burek : "i agree Tim..cut everything 10%"
Thomas Nelson : "I hate it, but their compromises are worse. Take the medicine and figue a way to make it work. We all ate Ramen noodles in college at one point."
Timothy Baron : "I'm a big fan of across the board cuts. No one is singled out."
Thomas Nelson : "Maybe we just have to go to a 3rd grade level and say........3% across the board cuts (or whatever is needed) and call it good."
Rob Clark : "REPRICE: 12:49 PM - Provident Funding Better"
Matthew Graham : "RTRS- BOEHNER SAYS THERE SHOULD BE NO LONG-TERM U.S. DEBT LIMIT INCREASE BEFORE SENATE PASSES BUDGET "
Matthew Graham : "RTRS- U.S. HOUSE SPEAKER BOEHNER SAYS HOUSE WILL PURSUE BUDGET STRATEGIES THAT FORCE U.S. SENATE TO PASS BUDGET "
Jason York : "if she isnt on the account, I do think you have to treat it as a gift, as dumd as that is"
Matt Hodges : "quick question - wife on loan. Husband taking title. using husband's account (she is not on it) for a portion of DP - that's just an asset on the 1003, not a gift asset, correct?"
Matthew Graham : "I guess what I'm saying is that if I were to float over the weekend, it wouldn't take much of a sell-off on Tuesday to force me to lock. "
Matthew Graham : "basically, I'm looking at the string of lower highs coming down in 10yr yields from the beginning of the year. That held yesterday, but barely. If it breaks, that's one line in the sand for the big picture. There's sort of a similar countertrend in MBS, but it's harder to assess in charts because of the roll."
Matthew Graham : "yeah, that was probably yesterday. I haven't looked at rates today, but if you accept the risk of being forced to lock on a move below certain levels on Tuesday, we are nearer the better-sold ends of recent ranges. That's about as 'floaty' as you're ever going to see me be (which isn't even that much)."
Victor Burek : "i think we are seeing that..stocks flat, treasuries higher in price"
Dustin McAlister : "i see what your saying but generally before holidays don't we see some pull back for saftey from traders"
Victor Burek : "me personally, never like to lock on friday and even more so when it is a 3 day weekend"
Matthew Graham : "i don't know. where are rates going to be on Tuesday?"
Dustin McAlister : "this may have been addessed already but with the holiday and us being green is it pretty safe to float through weekend? "
Matthew Graham : "bout 5 minutes ago. maybe some slight correlation with the small move higher in yields in 10's, lower in MBS prices, but of course, nothing outside the range. "
Matthew Graham : "Bloomberg wire: House GOP Considers Extending Debt Limit To About April 15th"