If we consider the range of trading in MBS and Treasuries so far this week, Today's session saw both markets move from one extreme to the other and half-way back again. With the benefit of a much longer trading day than MBS, this was more striking in 10yr Treasuries, which moved from 1.735 overnight to 1.675 mid-day and are now leveling off around 1.70. Fannie 3.0 MBS moved from 104-01+ to 104-11 and are now going out around 104-06 into the afternoon. The mid-day rally began in earnest with a major sell-off in Eurodollars at 10am. Stocks swung lower, Treasury yields followed, and MBS rallied steadily until all of the above changed course just before 1am. There was no major economic data. Volume was good, but the implications were equivocal as both support and resistance levels were well represented.
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 4:02 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
Well Off Previous Highs. Reprice Potential Shifting
The afternoon has been more volatile than average for bond markets and MBS are quickly getting back to defense mode after being on offense heading into 1pm. At that time, Fannie 3.0s were hitting 104-11 and are now back down to 104-05. With the most recently reported positive reprices not even half an hour old, we're already edging into territory where that reprice risk shifts negatively for any lenders who repriced during the highs.
That's a bit of a stretch at 104-05, but could materialize if we fall from here. Whatever the case, volatility is elevated, positive reprice potential is clearly off the table, and we're now hoping that the V-shaped bounce just before 1pm in 10yr Treasuries doesn't continue back to morning levels. The 3pm pit close just snuck in under the 1.702 pivot point, which is technically positive, but doesn't get us out of the woods completely.
ECON: Fed's Beige Book. No Surprises
Prepared at the Federal Reserve Bank of Dallas based on information collected on or before April 5, 2013. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.
Reports from the twelve Federal Reserve Districts suggest overall economic activity expanded at a moderate pace during the reporting period from late February to early April. Activity in the Cleveland, Richmond, St. Louis, Minneapolis, and Kansas City Districts was characterized as growing at a moderate pace, while the Boston, Philadelphia, Atlanta, Chicago, and San Francisco Districts noted modest growth. The New York and Dallas Districts indicated that the pace of expansion accelerated slightly since the previous Beige Book.
Treasuries Hit 2013 Lows, MBS Near April Highs, Positive Reprice Potential
Despite a series of headlines about suspicious packages intercepted en route to US political leaders, early afternoon swings in US markets were more likely led by the collapse of European markets into the end of their trading day. Bunds rallied and Euros sold off aggressively just after 10am. US Treasuries and equities followed the "risk-off" move. 10yr yields briefly hit their lowest levels of 2013 and Fannie 3.0 MBS (May coupons) hit their highest levels of the month (previous highs near 104-19 were April coupons--so "highs of the month" is a bit of technicality).
The rally follows a previous pivot at 1.70 in 10yr Treasury yields. After breaking 1.702 earlier this morning, 1.697 was hit repeatedly as a supportive ceiling. The rally picked up steam after the noon hour and now has a new intraday ceiling to consider at 1.686. If that holds, MBS look keen on holding 104-09, and that would very likely lead to some positive reprices.
Even now, positive reprice potential is better than average, with some lenders likely just waiting to be sure we don't snap back to previous levels. Moving below 104-08 would likely dampen the positive reprice outlook.
Live Chat Featured Comments
Matthew Carver : "REPRICE: 2:38 PM - Sierra Pacific Better"
Tom Schwab : "REPRICE: 2:17 PM - Flagstar Better"
Jeff Anderson : "REPRICE: 2:06 PM - Chase Better"
Christopher Stevens : "additional 70bps by end of year is what I am hearing"
Andy Pada : "when are they supposed to be implemented? "
Matthew Graham : "new GFees are already on the agenda."
Jeff Anderson : " I was just going to ask the same thing, AP. New Gfees coming?"
Andy Pada : "new gfees?"
Jason Anker : "CR - i think its new value LTV not orig for MI Removal. "
Jason Adams : "REPRICE: 1:25 PM - Citi Better"
Caroline Roy : "with a DURP MI transfer, when will the MI go away? is that based on the original MI scenario or on a new appraised value?"
Christopher Stevens : "so if you have an affiliated title company like we do you are not too happy"
Christopher Stevens : "yes it does JW"
Jeff Weaver : "Does 3% comp include revenue from affiliated title companies or real estate companies"
Christopher Stevens : "TM- slippery slope when you talk bonus' to LO's based on volume and quality"
Bryce Schetselaar : "But with a bank or a mortgage banker (the company), how can one tell what the company is charging?"
Tony Mango : "the lo comp counts for broker, banker, or bank LO's. While a broker includes total company comp, banks and bankers still have to count as well. Sounds like an accounting disaster. What if one lo gets bonuses for higher volumes, or loan quality etc. There is no way to account backwards, which could casue compliance flaws."
Christopher Stevens : "It is H.R. 1077 http://beta.congress.gov/bill/113th-congress/house-bill/1077"
Bryce Schetselaar : "Yeah, that would really make things tough on brokers in small loan states, especially"
Christopher Stevens : "For now. MBA is really piushing to get that removed. I am headed to the National ADvocacy Conf in DC next week and that is one of the main points."
Bryce Schetselaar : "I guess the part that got me was that LO comp was to be included..."
Christopher Stevens : "It would haveto be well under 3% in order to take into account for closing fees"
Bryce Schetselaar : "Was talking to a lawyer yesterday who said that when QM goes into effect, lender comp AND LO comp will have to be under 3% for brokers. Does anyone else read it that way?"
Rob Clark : "REPRICE: 12:36 PM - Provident Funding Better"
Matthew Graham : "slightly different scaling: http://tinyurl.com/cnskuuw"
Matthew Graham : "To wit: http://tinyurl.com/cobt2s5 Euros in teal, s&p in blue, tsys in yellow, Bunds in green"
Matthew Graham : "no, I don't think the packages are the story necessarily. Looks more like Euro'"
Jason Anker : "MG we just get 5 ticks due to a suspicious package?"
Matthew Graham : "RTRS-US CAPITOL POLICE SAYS HAVE CLEARED PARTS OF TWO SENATE OFFICE BUILDINGS OVER SUSPICIOUS LETTERS, PACKAGE"