Even as stock markets made new highs (either 5yr+ in terms of the S&P or "all-time" in terms of the Dow), bond markets held on to the same old "Post-Italy" range almost as if by design. At their highs, 10yr yields were into the same 1.91's seen on Wednesday and Thursday last week and Fannie 3.0s's were near the same lows--not quite as low (103-12 vs 103-10) but given that we're one week closer to settlement, and a average 8 tick roll (8 ticks difference divided by roughly 4 weeks in a month = roughly 2 ticks a week), 103-12 is basically the same as 103-10. Despite the adherence to recent trend boundaries, bond markets certainly favored the weaker side of the trend today. Tomorrow continues the theme of "increasing activity," and introduces the risk that a negative surprise in the ADP numbers could challenge the short term range ahead of Thursday and Friday's ECB and NFP headliners.
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
Building on Morning Support, Close To Positive Territory
MBS continue to fare favorably into slightly higher Treasury yields. Although 10's are off their highs of the day, they're still over a bp from yesterday's latest levels (currently 1.54bps higher at 1.8944). MBS, however, are within a tick of breaking even with Fannie 3.0's down only 1 on the day at 103-16.
There haven't been any significant market movers effecting the slow clawing-back of morning losses, but the biggest bounce did coincide with the first major sidestep in the equities rally. Sidestep yes, sell-off, no... at least not yet.. S&P's have been looking more wobbly, but are still almost 10 points higher than they're previous 5yr high close on 2/19.
Any negative reprice risk that had been lurking earlier this morning has long since evaporated with the steady progress coming out of 11am. One lender has already repriced positively, but we'd need to see a sustained break back into positive territory before we'd start to entertain the possibility of additional reprices.
Live Chat Featured Comments
Nate Miller : "REPRICE: 3:21 PM - Interbank Better"
Andy Pada : "to extend the metaphor, one could argue that those discussing withdrawal are suffering from altitude sickness."
Brent Borcherding : "Joe, don't worry...they just think this is the top, they're about to walk around the bend and realize there is more to climb."
Joe Probst : "WE need to rest at the top for a while."
Matthew Graham : "Long story short, it's like we were climbing a mountain, and now the perception is we've reached the peak and now can concern ourselves with calculating the method, pace, timing, and consequence of our potential descent."
Matthew Graham : "I think most of the FOMC would agree that withdrawal is "a ways" off and "conditional," but for some reason, they're feeling the need to address it increasingly. I think that reason has most to do with the fact that they didn't fully appreciate the impact that the Jan 3rd minutes would have insofar as they marked a sort of turning point from, or a cresting of the hill from easing being "stable and potentially expanding" to "stable and potentially contracting" even if the outlook for contraction"
Brent Borcherding : "Why is anyone even talking about the withdrawal of stimulus?"
Matthew Graham : "RTRS- LACKER SAYS FED'S LARGE BALANCE SHEET MEANS SMALL MISTAKES DURING WITHDRAWAL OF STIMULUS COULD HAVE LARGE CONSEQUENCES "
Victor Burek : "even witha bad adp or nfp, probably still tough to get below 1.83 on 10yr...good jobs data we can easily get to 2.05 and maybe 2.10"
Matt Hodges : "i'll likely lock 1-3"
Victor Burek : "i locked a couple earlier"
Ted Rood : "I did."
Andy Pada : "Who is locking in today?"
Michael Kelleher : "if it is on cnbc it means it must be true is why i posted it"
Michael Kelleher : "guy on cnbc just predicted 10 year to 1.5 by the end of the year - ETA"
Matthew Graham : "prepay speeds affect value based on price. If I pay 99-00 for something, I'd rather it prepay right away so I can get my 100-00 and move on."
Gus Floropoulos : "but the value of the pools I understood would be at a premium due to unliklihood of prepays, especially in a rising rate environment....but i'll take ur word for it"
Matthew Graham : "likelihood of prepays tend to be reflected in price. In a potentially rising rate environment, low rate pools that are unlikely to prepay will be worth much less. But I don't know the particulars of what they're selling."
Gus Floropoulos : "likelihood of prepays are low, giving even more value"
Gus Floropoulos : "value of these mortgages are at highs....why not sell and move along"
Matthew Graham : "RTRS - CITIGROUP CEO: SIGNED DEAL THIS QUARTER TO SELL $1.5 BLN OF MORTGAGE HOLDINGS "
Clayton Sandy : "REPRICE: 12:46 PM - Provident Funding Better"
Jason York : "http://www.benefits.va.gov/homeloans/documents/docs/guaranty_calculation_examples.pdf"
Chip Harris : "Can anyone direct me to where it explains the VA jumbo loan where they can put more money down and do a loan over the county limits?"
Victor Burek : "thats 400,000 full time jobs if my math is correct"
Victor Burek : "if we have 160million workers and it drops by .1hours, that is 16million less hours worked"
Victor Burek : "i think the avg work week hours from nfp is gonna be very important in the coming months"
Matthew Graham : "that's a very good point vic, and I don't know exactly how much the consensus already reflects that phenomenon, but here's a for instance: my wife's office (due to sequester), is turning off overtime availability. I realize the sequester shouldn't yet be reflected in the jobs figures, but perhaps that same sentiment of "4 part time vs 3 full time" started to increase in anticipation."
Victor Burek : "i will take the over on adp..lot of companies higher 4 part timers, instead of 3 full timers"
B-C : "right Brett, job opportunities are probably popping up at an alarming high rate"
Brett Boyke : "assume data will hurt us until it doesn't"
Tony Cardinal : "o/u on adp tomorrow? any takers?"