German economic sentiment data came in at the highest levels since May 2010... The House may pass legislation to extend the debt ceiling deadline until mid May 2013. Obama said he'd sign it... Earnings season continues to be bullish. Equities markets are flying high--the highest since late 2007. Despite all that, bond markets managed to hold in unchanged to slightly better territory today, though Treasuries out-classed MBS in the process. This could suggest that some extra caution was at work on Thursday, which is now helping bond markets do "better than they normally would" given the stock rally. The other more speculative way to view this is that bond markets are just staying more even-keeled until the House and Senate actually pass the potential legislation. Not speculative, however, is the fact that bond markets have broadly been able to break from the typical trend of following stocks because bond markets have been unwinding the steep sell-off into the New Year. That sell-off pushed the limits of a long-term trend higher in rate, and some correction was likely even if the trend remained intact. On that note, today's gains haven't been enough to suggest anything else is the case. We fear a passage of the debt-ceiling extension legislation could reinforce the trend, but would note that 10yr yields could easily fall into the 1.6's without technically challenging the longer term uptrend.
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 3:51 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
U.S. Senator Corker urges regulators to simplify mortgage rule
An influential Republican U.S. senator on Monday urged regulators to carefully craft a mortgage rule so that it does not keep the mortgage market dependent on government support.
Senate Bob Corker, a member of the Senate Banking Committee who has been an outspoken voice on housing reform, called for changes to the new mortgage standards that are being drafted by six regulatory agencies.
One such rule defines Qualified Residential Mortgages, or QRMs. These seemingly safer loans would be exempt from a "skin in the game" requirement that calls for mortgage originators to keep a portion of securitized loans on their books.
The problem with the current proposal, Corker said, is that the QRM rule would also exempt loans backed by government-controlled Fannie Mae and Freddie Mac. That would likely mean lenders would only make loans that could be sold to Fannie, Freddie or the Federal Housing Administration, and would push private capital out of the U.S. mortgage market, he said.
Positive Reprice Potential Increasing MBS Hit New Highs
MBS have edged up within a tick of Friday afternoon's highs. Treasuries have led the breakout of the morning's narrow range, themselves challenging Friday's lowest yields. The current move is technical and tradeflow-based--not shared by equities markets. Fannie 3.0s are currently up 3 ticks at 104-07 and 10yr yields are down half a bp on the day at 1.8346.
There's clearcut technical resistance here from the longer term uptrend in rates as well as 2-session highs in MBS. If 10y yields were to break much lower, we could see some sort of mini-snowball of follow through. Holding these gains for now though. If MBS continue to hold or improve upon these levels, the "early crowd" may be in for a positive reprice fairly soon, but nothing on the scale that would get a majority of lenders onboard (the total range on the day is still under .25).
Live Chat Featured Comments
Brett Boyke : "pretty big lag in MBS relative to the TSY mover intraday"
Jeff Anderson : "Neither are equities. Saw a stat that 60% of mutual funds and 70%+ of Hedge funds couldn't beat their indexes as they couldn't trade based on fundamentals. Crazy markets, TB."
Tom Bartlett : "the bond market is not prepared to deal with a functional system."
Jeff Anderson : "Think they can kick it until 2016? "Not my problem anymore." - OO"
Brett Boyke : ""O approves this can kick""
Matthew Graham : "RTRS- WHITE HOUSE SAYS IF THREE MONTH DEBT LIMIT INCREASE PASSES CONGRESS, OBAMA WOULD NOT STAND IN THE WAY OF IT BECOMING LAW "
Matthew Graham : "RTRS - WHITE HOUSE SAYS REPUBLICAN PLEDGE TO RAISE DEBT CEILING DE-ESCALATES UNCERTAINTY OVER ISSUE, WHITE HOUSE WELCOMES MOVE "
Matthew Graham : "RTRS- WHITE HOUSE SAYS SHOULD RAISE DEBT LIMIT OVER LONG TERM TO AVOID UNCERTAINTY; BUT REPUBLICAN PLEDGE RECENTLY TO RAISE DEBT CEILING IN THE SHORT TERM IS POSITIVE "
Tom Bartlett : "nice spike...will it hold? and a hearty gm all!"
Brett Boyke : "getting near reprice territory"
Mike Drews : "no sir"
Victor Burek : "nope"
Matt Hodges : "no"
Steve Chizmadia : "Not here Jason"
Jason Anker : "question: FHA lenders, are you haveing compliance issues giving lender credit toward pre-paids?"
Mike Drews : "10yr taking a long hard look at breaking lower"
Matthew Graham : "how bout this: it's not a black and white issue."
Jason Anker : "SC - three choices yes sure 100%. I'm talking about multiple rate updates based on market every day many times per day?"
Steve Chizmadia : "If the market is swinging in one direction, for the good or for the bad I communicate that with a quick email."
Steve Chizmadia : "Personally, I always give 3 with break even points or more at the customers request"
Darren Costa : "Melissa, the market does move all day long and rates do change intra day. The market does close and most companies have a lock cut off time. How much does a .125 in price movement affect your monthly payment?"
Steve Chizmadia : "I disagree Jason."
Jason Anker : "It’s not reasonable to provide multiple rate updates per day. I’m sure your LO have more than 1 borrower right now. "
Sung Kim : "Melissa - you will never get the same level of service from a builder mortgage company, but the incentives you lose by going with an outside lender makes it tough to leave"
Melissa Sawyer : "Yep, nc"
Sung Kim : "new contstruction"
Matt Hodges : "what do you mean "assigned" to you?"
Melissa Sawyer : "The way my LO works it is I have to e-mail her each day to get an update and then I get back one rate with one lender credit percentage and am told I can lock anytime b4 4pm. She has admitted rates change multiple times a day, but yet I only ever see one per day. Frustrating from a consumer standpoint. Will definitely "shop around" for an LO next time I buy instead of letting one be assigned to me."