MBS took a running start downhill this morning before reaching the edge of the cliff marked by yesterday morning's "ledge" of prices. This was the 102-28 area hit after yesterday's 8:30am economic data, including the weaker-than-expected Jobless Claims figures. MBS would go on to rally further after Philly Fed data at 10am, resulting in their best day of the month by a wide margin. Staring over the precipice of that same cliff (OK, it's not a very epic sort of cliff by the time we get back down to 102-28 from yesterday's highs at 103-10, but we're going for some continuity with the title here!), MBS turned, mouthed the words "it was never about the data..." and took the leap, ultimately making a splash (lots of them) around the important 102-16 waterline. What was all that about the data though? Surely, we improved yesterday because of weak data and lost ground today due to strong Consumer Sentiment, right? Not exactly. The data points over the past two days, in our view, have served the role of "hide-behinds" for trading levels to carve out a range from which to approach next week's watershed FOMC Minutes. Will it be one-tenth as eventful as the hype seems to suggest? All we know for now is that markets are sure trading it that way, or maybe the Minutes are a "hide-behind" too!
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
Back At The Lows. Reprice Risk Still Out There
Fannie 3.0s hovering around 102-16, in line with yesterday's and today's lows. This after a bounce attempt from 12:30 to 1:30 that got us up to 102-22. The few traders who came back to the desk after lunch quickly corrected that little problem and here we are again....
It's conceivable that a lender or two who had been holding out on a negative reprice at 12:30 would now have the ammo needed to pull the trigger. The risks aren't especially higher than they were at 12:30, and things are finally dying down in terms of volume and moment-to-moment volatility. But it is "later in the day" on a Friday and we're at 2-day lows, so we wouldn't rule anything out.
Follow up to the Previous Alert
MBS dictate mortgage rates, but Treasuries almost always provide better technical cues, and we probably just got one.
10's had been doing a fine job of holding on to a ceiling at 1.921, hit just after Consumer Sentiment, and with pretty good volume. We drifted sideways from there and stood at 1.917 at 11:30am. MBS were still holding 102-26 at that time.
Over the course of the next 5 minutes, selling pressure looked like it was picking up and when 10's hit 1.921, they popped quickly higher. Though the move was small, it seemed potentially technically significant--at least enough to issue the previous alert. We're now up over 1.935.
Unless MBS are leading a move, they tend to lag the quicker technical moves in Treasuries or Treasury futures, and this was the case just now, though they didn't wait long. At 102-22 on the day, MBS are now down 13 ticks, and the last four of those followed quickly after the Treasury pop. Such a "pop" is what we were afraid of at 11:35 when the alert came out with MBS still at 102-26, hence the quick, 1 sentence alert (those aren't common).
In the time it took to type the last two sentences, we're down another tick to 102-21 now, and it looks like we have further to fall before bouncing. Reprice risk is about as high as it gets. If you haven't seen one yet, you probably will.
Potential Technical Breakdown. Negative Reprice Risk Increasing
More to follow...
10's just broke highs and MBS shed 2 quick ticks.
Live Chat Featured Comments
Christopher Stevens : "REPRICE: 1:15 PM - Chase Worse"
Matt Sullivan : "REPRICE: 12:43 PM - Fifth Third Mortgage Worse"
Daniel Cruz : "REPRICE: 12:41 PM - Interbank Worse"
Victor Burek : "REPRICE: 12:31 PM - Plaza Worse"
Matthew Carver : "REPRICE: 12:30 PM - Flagstar Worse"
Matthew Graham : "from : http://www.mortgagenewsdaily.com/mortgage_rates/blog/309072.aspx"
Matthew Graham : ""To help maintain a healthy fear of selling, keep in mind that most options for charting intermediate term (around 6-9 months) are bearish. Simple technicals are still bearish as well, as seen with the set of long to short moving averages on the chart (green/red crossing orange is an early signal while crossing purple is a bigger picture signal. Even after Thursday's rally, everything's still under the purple line. Just sayin...""
Matthew Graham : "just setting up that pre-FOMC range. Hopefully you've been reading the blog posts on MND. I've been talking more about it there."
Matthew Carver : "REPRICE: 12:10 PM - Sierra Pacific Worse"
Matthew Carver : "this all seems like such an over reaction"
JCC : "REPRICE: 12:08 PM - Wells Fargo Worse"
Tom Schwab : "REPRICE: 12:07 PM - AMC Worse"
Josh Stika : "REPRICE: 12:07 PM - Provident Funding Worse"
Bryan LaFlamme : "REPRICE: 12:05 PM - 360 Mortgage Worse"
Andrew Horowitz : "healthy retest of the low from yesterday and then maybe a minor bounce back "
JRS : "REPRICE: 11:52 AM - Franklin American Worse"
Steve Chizmadia : "Many of those to follow unfortunately"
Matthew Carver : "REPRICE: 11:50 AM - Quicken Loans Wholesale Worse"
Daniel Kramer : "seriosuly, what is going on with 10yr and MBS? how does it move so strongly in both directons day by day?>"
Scott Valins : "were still sub 1.94, MBS sell-off feels extreme"
MMNJ : "no traction at all"
Christopher Stevens : "wow Wells pricing on GNMA is off almost 50bps from yesterday"
Rich DeSimone : "This is crazy"
Jason Sheaffer : "and down the drain we go"
Jude Bridwell : "losing everything we gained yesterday"
Bert Swyers : "cant win, got 5 floaters and they are sinking, just signed em up yesterday and AM today"
Ken Crute : "sounds like I have heard that before "
Steven Stone : "the stock market has to top out soon"
Victor Burek : "interesting Q&A with Goldman about tapering, http://www.zerohedge.com/news/2013-05-17/goldman-issues-qa-tapering-says-not-yet"