Bond markets experienced a moderate amount of volatility overnight, improving from yesterday's already impressive rally into the European hours and then backing off ahead of the domestic open. Despite crossing the 8am line just slightly weaker, both MBS and Treasuries have held a remarkably narrow range in line with yesterday's best-levels (remarkable given the volatility surrounding the rally, and the size of the rally itself). Equities rose out of the gate, pulling bond markets to their weakest levels just after the stronger Consumer Confidence and New Home Sales data at 10am. Since then, everything has been moving slowly in the other direction with MBS hovering around unchanged levels at the moment. Bernanke is currently answering questions in the senate as part of his 2-day congressional testimony though comments from Italy's Bersani have been coming in as well. Markets seem to be considering both, and if anything paying more attention to Bernanke's dovishness (which is "expected," but also "a relief").
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 11:09 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
FED: Bernanke Delivers Prepared Remarks Before Senate Banking Committee
With unemployment well above normal levels and inflation subdued, progress toward the Federal Reserve's mandated objectives of maximum employment and price stability has required a highly accommodative monetary policy. Under normal circumstances, policy accommodation would be provided through reductions in the FOMC's target for the federal funds rate--the interest rate on overnight loans between banks. However, as this rate has been close to zero since December 2008, the Federal Reserve has had to use alternative policy tools.
ECON: New Home Sales Rise Fastest In 20 Years, Maybe
- Sales 437k vs 381k Consensus
- 15.6% increase is largest since April 1993, highest level since July 2008 (but note 18.9% margin of error)
Sales of new single-family houses in January 2013 were at a seasonally adjusted annual rate of 437,000, according to
estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 15.6 percent (±18.9%)* above the revised December rate of 378,000 and is 28.9 percent (±21.7%) above the
January 2012 estimate of 339,000.
The median sales price of new houses sold in January 2013 was $226,400; the average sales price was $286,300. The
seasonally adjusted estimate of new houses for sale at the end of January was 150,000. This represents a supply of 4.1
months at the current sales rate.
ECON: Consumer Confidence Stronger Than Expected
- Confidence 69.6 vs 61.0 Consensus
The Conference Board Consumer Confidence Index®, which had declined in January, rebounded in February. The Index now stands at 69.6 (1985=100), up from 58.4 in January. The Present Situation Index increased to 63.3 from 56.2. The Expectations Index improved to 73.8 from 59.9 last month.
The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was February 14.
Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer Confidence rebounded in February as the shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears to have abated. Consumers’ assessment of current business and labor market conditions is more positive than last month. Looking ahead, consumers are cautiously optimistic about the outlook for business and labor market conditions. Income expectations, which had turned rather negative last month, have improved modestly.”
ECON: Case-Shiller Home Pirces Improve Slightly Quicker Than Expected
- 20 City prices +0.9 Seasonally Adjusted, Vs +0.5 Forecast
- non-adjusted +0.2 vs -0.2 Forecast
- Year/Year +6.8 pct, most since July 2006
Data through December 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that all
three headline composites ended the year with strong
gains. The national composite posted an increase of
7.3% for 2012. The 10- and 20-City Composites reported annual returns of 5.9% and 6.8% in 2012. Month-
over-month, both the 10- and 20-City Composites move
d into positive territory with gains of 0.2%; more
than reversing last month’s losses.
In addition to the three composites, nineteen of th
e 20 MSAs posted positive year-over-year growth – only
New York fell.
Bond Markets Hold Majority Of Gains Overnight
The overnight session was fairly straightforward with US Treasuries continuing to do what they did for most of Monday: follow the Euro. Asian hours saw a sideways-to-slightly-weaker slide as both Euros and Treasuries hit new 1+ month lows heading into the European session.
10's made it as low as 1.836 and along with Bunds and the Euro, bounced slightly higher before leveling off into a narrow but choppy range trade that persisted throughout the night. 10's hit New york in a range of 1.88 to 1.86 and are currently just under a bp higher at 1.874. S&P futures never moved lower after 5pm and are now at their best levels of the overnight session, roughly 10 points improved from Monday's close.
MBS came in the door a few small ticks weaker than yesterday's mighty (relative) closing levels at 103-19. They've been no higher so far this morning and are currently 2 ticks off on the session at 103-17. House price data is coming up with Consumer Confidence, New Home Sales and Bernanke at 10am.
Live Chat Featured Comments
Matthew Graham : "RTRS- JPMORGAN MORTGAGE EXEC SAYS BANK PLANS TO GROW RETAIL AND CORRESPONDENT MORTGAGE LENDING "
Matthew Graham : "Q&A coming right up: http://www.c-span.org/Events/Fed-Chair-Bernanke-to-Present-Monetary-Policy-Report-to-Congress/10737438337-1/ "
Matthew Graham : "RTRS - BERNANKE: FED CLOSELY MONITORING POTENTIAL RISKS OF EASY POLICY, BUT CONFIDENT IT HAS TOOLS TO TIGHTEN WHEN NEEDED"
Matthew Graham : "RTRS- BERNANKE: LOSS OF OUTPUT AND EARNINGS ASSOCIATED WITH HIGH UNEMPLOYMENT REDUCES GOVERNMENT REVENUES, INCREASES SPENDING "
Matthew Graham : "RTRS- BERNANKE: U.S. SHOULD CONSIDER REPLACING SHARP, FRONT-LOADED SEQUESTRATION CUTS WITH POLICIES THAT REDUCE DEFICIT MORE GRADUALLY "
Matthew Graham : "RTRS- FED’S BERNANKE SAYS BENEFITS OF FED ASSET PURCHASES, POLICY ACCOMMODATION ARE CLEAR; OUTWEIGH POTENTIAL COSTS AT THIS POINT "
Matthew Graham : "RTRS - US FEBRUARY CONSUMER CONFIDENCE INDEX 69.6 (CONSENSUS 61.0) VS JANUARY REVISED 58.4 (PREVIOUS 58.6) - CONFERENCE BOARD "
Matthew Graham : "RTRS- US JAN SINGLE-FAMILY HOME SALES 437,000 UNIT ANN. RATE (CONS 381,000) VS DEC 378,000 (PREV 369,000) "
Cheldon Frank : "No underwriting needs the actual tax returns to see if they are taxed on it. They may have other income coming in that would make the SS taxable. The only way to prove that is tax returns."
Steve Chizmadia : "Anyone run into this before. Can't I just print something from Social Securities website to validate this?"
Steve Chizmadia : "UW is telling me the only way to prove it is no longer taxable is to file 2012 returns so I can gross it up"
Steve Chizmadia : "Question for you guys. Have a client who started taking SSI early. was 62 in June of 2011"
Jeff Anderson : "Goldman Sachs announced job cuts also. Not sure the total."
Paul L. Martin : "JPMorgan Chase plans to cut up to 19,000 from mortgage and community bank businesses through 2014."
Matthew Graham : "RTRS - U.S. HOME PRICES +0.6 PCT IN DECEMBER FROM NOVEMBER - U.S. REGULATOR "
Steve Chizmadia : "We have not had a appreciating market in home values for appraisers to justify time adjustments to reflect better values yet. "
Steve Chizmadia : "Same here VB"
Victor Burek : "my refinance appraisals are not showing that increase"
Matthew Graham : "RTRS- US DEC 20-METRO AREA YEAR-ON-YEAR HOME PRICE INCREASE LARGEST SINCE JULY 2006 "
Matthew Graham : "RTRS- US DEC 20-METRO AREA HOME PRICES +6.8 PCT (CONSENSUS +6.6 PCT) FROM YEAR AGO -- CASE-SHILLER "
Matthew Graham : "RTRS- US DEC 20-METRO AREA HOME PRICES NON-ADJUSTED +0.2 PCT (CONSENSUS -0.2) VS -0.1 PCT IN NOV-S&P/CASE-SHILLER "
Matthew Graham : "RTRS- US DECEMBER HOME PRICES IN 20 METRO AREAS +0.9 PCT SEASONALLY ADJ (CONSENSUS +0.5) VS REVISED +0.7 IN NOVEMBER - S&P/CASE-SHILLER "
Craig LaBruno : "I am locking too when rate sheets come out. If I don't then I would be acting greedy in my mind. I am thankful enough for the rally we experienced yesterday but I have an strange feeling that it will not last. We'll see though."
Steve Chizmadia : "I have 3 loans ready for docs that will be locked when pricing comes out so were likely to rally after that Scott"