Perhaps less than coincidentally, the S&P just closed at it's lowest levels in more than a week on the same day that many lenders' rate sheets were at their best levels in more than a week. In both cases, it's a close call, but less disputable is the recently strong connection between equities and bond markets. MBS got a bit wishy-washy this afternoon as the lion's share of the day's liquidity was absorbed in the morning hours. MBS fell moderately from 2-3pm, but stock market weakness from 3-4pm helped to reinforce the 3pm weakness in bond market with both MBS and Treasuries making improvements from there. 10yr yields crossed into the 1.95's just after 4pm and Fannie 3.0s regained their 103-16 pivot point. With the exception of Friday morning's initial post-NFP knee-jerk, this was essentially the dividing line between last week's best levels and the previous week's worst.
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 4:07 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
Late Day Illiquidity Causes Moderate Weakness For MBS
Fannie 3.0s trading has been choppy and sparse surrounding the 3pm Treasury close. Whereas Treasuries have marched steadily higher in yield since the big block trade leading to the best levels of the day around 1:43pm. Movement there has been quite linear and rather mild as far as bouts of weakness are concerned.
MBS, on the other hand, have seen far fewer ticks of movement. MBS joined with Treasuries to move toward weaker levels into the 2pm hour, but flat-lined at 103-14 and then 103-12 with minutes instead of seconds separating the trades.
Using 10's as a cue, 1.973 seems to be holding fairly well as a sort of ceiling for now, but at 1.969, we're close enough to be paying attention. There's a small chance of negative reprices here with MBS down around 4 ticks from the most lenders' rate sheet print times. Despite the mention of the "R" word here, we want to emphasize that the shape of the charts this afternoon is a factor of liquidity and 10yr yields would serve as a better barometer of any selling pressure (in other words, we haven't seen much selling pressure yet).
Lingering Positive Reprice Potential For Some Lenders
If bond markets were to close right now, 10yr yields would be at their best closing level since last Friday 1/25, and MBS would actually be a few ticks higher. Although there would still be a significant amount of ground to make up from there if we're to revisit earlier trading ranges, bond markets have done a good job of recovering last week's losses.
10yr yields were as low as 1.951 in the past half hour and Fannie 3.0s have been able to hold near their 103-16 pivot. Positive reprice potential is ongoing at these levels (several lenders just repriced), though the gains won't necessarily get every lender in the repricing mood depending on the time of the initial rate sheet.
The stock lever is very much in play and the current bottoming out in stocks is giving similar pause to the bond market rally, but as of now, there's no disconcerting bounce back in the other direction. We'll let you know if that changes.
Live Chat Featured Comments
Jeff Anderson : "REPRICE: 2:55 PM - Chase Better"
Gaius Rossini : "https://www.fanniemae.com/content/notification/notification-selling-announcement-sel-2013-02"
Andy Pada : "See newstream at 2:34 pm GR; appears to lump Fannie and Freddie together"
Gaius Rossini : "the release last week from Fannie: $2000 mtg credit or $500 cash to the borrower... will that have any impact?"
Tom Schwab : "REPRICE: 2:42 PM - Franklin American Better"
Victor Burek : "so from first projections they missed by about 1%, then with revised estimates they were still off by about .5"
Victor Burek : "this was the Fed estimate in 11/2011...Officials now expect the world's largest economy to expand by a tepid 2.5 percent to 2.9 percent next year, down from the rosier 3.3 percent to 3.7 percent they were expecting in June."
Steven Stone : " Real GDP increased 2.2 percent in 2012 (that is, from the 2011 annual level to the 2012 annual
level), compared with an increase of 1.8 percent in 2011.
Anthony Hicks : "2.2% for 2012"
Victor Burek : "what was our GDP for 2012?"
Brent Borcherding : "That's going to be asking a lot with the direction q4 appears to have GDP heading."
Victor Burek : "have they ever matched or beat an estimate?"
Brent Borcherding : "They think it's possible every year."
Matthew Graham : "RTRS- FISHER: I WOULD LIKE TO SEE 3 PCT GROWTH THIS YEAR, THINK IT'S POSSIBLE "
Scott Valins : "REPRICE: 2:20 PM - Fifth Third Mortgage Better"
Michael Tadros : "REPRICE: 2:15 PM - Interbank Better"
MC : "REPRICE: 2:10 PM - Sierra Pacific Better"
Matthew Graham : "RTRS- FISHER: LIKE BULLARD, I THINK THE IDEA OF TAPERING OFF ON QE3 MAKES SENSE, DEPENDING ON ECONOMY "
Matthew Graham : "RTRS- FISHER: I AM NOT WORRIED ABOUT PRICE INFLATION, WHAT I'M WORRIED ABOUT IS EFFICACY OF FED POLICY "
Matthew Graham : "RTRS - FED'S FISHER, IN BLOOMBERG RADIO INTERVIEW: SEEING SOME PROGRESS IN TERMS OF HIRING, BUT NOT ENOUGH "
Matthew Graham : "RTRS- U.S., STATE PROSECUTORS PLAN TO FILE CIVIL CHARGES AGAINST STANDARD & POOR'S RATINGS UNIT ALLEGING WRONGDOING IN RATING MORTGAGE BONDS BEFORE FINANCIAL CRISIS-WSJ "