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From MBS Commentary
MBS RECAP: Range Holds as Risk Appetite Returns
MBS Week Ahead: Decision Time For The Range as Data Ramps Up...
MBS RECAP: Bonds Briefly Touch 2017's Best Levels For No...
MBS Day Ahead: Bonds Look to Challenge Consolidation Range with...
MBS RECAP: Calm, Positive Day For Bonds
Other Top Headlines
Highest Home-Buying Demand in Years Stifled by Tight Inventory
Rent Trends Continue to Help Lenders; FHA and Ginnie Changes...
Mortgage Rates in Line With 2017 Lows
New Home Sales Up Less Than Expected; Prices up 7.5% Annually
Banks and Lenders Adjusting Business Models; Radian President...
Home buyers flock to...
Tepper: Still long stocks...
Pending home sales down...
Inventory Stifling Best Housing Demand in Years; Rates Rise; Property Tax Estimates Need Improvement
100% agree w/ your closing comment. Was already thinking that...
Late to the comment party, but it is important to say lacking...
Not sure if it's "good," but numbers that low are...
This survey was only 1k buyers? Is that really a good sample...
If you are working for a Lender who takes 51 days to close. I...
BTW Jann--this is a GREAT article, and should help originators...
This really isn't surprising at all. In a purchase market...
This is surprising. How can anyone be surprised by closing costs...
Have MLO license interpretations for prior felonies been challenged /re-defined less...
Do we qualify this year
How do I find the historical data for prices on Agency MBS?
Bottom Right Default
State Name: New Jersey
State Name underscore: New_Jersey
State Name dash: New-Jersey
State Name lower underscore: new_jersey
State Name lower dash: new-jersey
State Name lower: new jersey
State Abbreviation: NJ
State Abbreviation Lower: nj
MBS Commentary Home
Fed Minutes Today at 2pm EST
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and MBS Live members have been on top of those movements every step of the way.
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MBS MID-DAY: THIS IS WHY YOU WANT MBS LIVE!
May 22 2013, 12:41PM
: MBS Morning Market Summary
If you read this commentary with any sort of frequency, you may have noticed a trend of late, where the mid-day recap has been coming out later than normal. As we've said, this happens when MBS have sold off sufficiently, and early enough in the day to create negative reprice risk before the time the mid-day commentary is automatically collated in our system. Unfortunately for bond prices, that's happened quite a lot lately. During these times, I'm writing reprice alerts for
and interacting in real time with the other members of the MBS Live community on the dashboard. The first reprice alert today was out at 10:39am, well in advance of any lender reprice, and I've written two additional updates/alerts since then. Even before the alert, the
MBS Live Dashboard
lit up like the 4th of July (but mostly with red fireworks), and the live chat was buzzing with reactions to the sell-off. I don't make it a habit to plug our paid service too much in the stuff that I write, but today is one of the days where it would be inexcusable for me not to do so considering the timeliness of the pricing and alerts, and if I might be so bold, the quality of the content. The past few weeks have been rough for prices, and unpleasant for many of our members, but they've also enjoyed unparalleled warning on reprices and indeed been able to witness to catastrophes in real time every day. In short, I'm sorry the recaps have been occasionally delayed, but I've been needed on
, and that's where you should be if the timeliness of the content is even remotely important to you.
On a market related note, the seeds of today's trauma are planted in the recap below, but more will be coming at the end of the day. Here's part of the most recent alert that will show up in tonight's recap: "
After Bernanke said that the FOMC "could take a step down in the pace of purchases in the next few meetings," it was off to the races for bond markets. The sell-off was covered in the last alert, but what now? It's not as if Bernanke said anything that markets weren't already prepared to hear and nothing very different from the recent batch of Fed-speak suggesting the same.
Perhaps those similarities are reflected by the fact that MBS and Treasuries merely hit their weakest recent levels without breaking through. But after the Q&A ended, imaginations are running wild and MBS are revisiting their weakest levels of the day, as are Treasuries." Negative reprices are a way of life so far today. It's not a Black Wednesday just yet, but definitely a medium-dark shade of grey.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom.
Real time pricing
is available via MBS Live.
102-13 : -0-12
105-03 : -0-08
106-07 : -0-05
107-05 : -0-02
103-25 : -0-12
106-31 : -0-08
107-18 : -0-05
107-16 : -0-04
101-32 : -0-12
104-28 : -0-08
105-32 : -0-05
106-08 : -0-06
Pricing as of 11:08 AM EST
Morning Reprice Alerts and Updates
Below is a recap of instant
and updates issued via email and text alert to
MBS Live subscribers
Bond Markets Have Decided To Tank Now. Negative Reprice Risk.
Bernanke has been remarkably candid in discussing the prospects for tapering QE, and while this doesn't come as a surprise, it does confirm the logical parts of the "Hype" over the past few weeks. The nail in the coffin at the moment was Bernanke's statement that Fed could act before labor day in Early September, but declined to put a date on when Fed might change pace.
The important part is that he's speaking ASSUMPTIVELY regarding tapering. Not "IF" but "WHEN," and the when is looking like it's "SOON."
MBS have gone south with a reckless ferocity, and by the time you read this, there's no telling exactly how much worse off they'll be than current levels around 102-10. 10yr yields briefly cracked 2.0 and are currently at 1.9998. Negative reprices are likely.
Bernanke's Prepared Remarks Provide Early Boost
Before the Joint Economic Committee, Bernanke's prepared testimony has provided an early boost for bond markets. (
watch it live
) as he essentially says "we know what we're doing.' Here are the bullish highlights:
- Inflation is stable and likely to stay that way
- Policy is providing significant benefits
- Tightening too soon would carry substantial risk
- FOMC has made it clear it's ready to reduce QE if needed
- Policy has helped offset deflation pressures
- FOMC is aware of the risks of QE and low rates
- We'll continue bond buying until substantial labor market improvement
Taken together, these comments do much to address the burgeoning speculation over the past two weeks and provide something of an inoculation against any tapering comments in the Minutes later today. After all, this is the Chairman, whereas the Minutes will give voice to the FOMC members on the other end of the spectrum.
Fannie 3.0s are now up 9 ticks at 103-01 and 10yr yields are down to 1.9002. Bernanke is just wrapping up his prepared remarks and will soon being the Q&A portion. So far so good... With economic improvements (relative) to lean on, low inflation, and strengthening housing market, Ben has room to put pressure on congress regarding fiscal policy and take some of the focus off monetary policy. He looks like he's ready to 'dish it out' a bit today, so it should be interesting.
Keep in mind this speech is distinct from the FOMC Minutes which will be released later today at 2pm.
Bond Markets Slightly Stronger Ahead of Bernanke Testimony
10yr yields touched their best levels of the week to start the overnight session and chopped uneventfully higher during Asian market hours while maintaining yesterday afternoon's strong late-day range. The Bank of Japan's Kuroda said the recent epic selling spree in Japanese government bonds isn't having a big impact on the economy and the BoJ stands ready to make adjustments to their QE programs to prevent volatility in bond markets from "spreading excessively."
Treasuries rose to their highest overnight levels after Fed's Dudley--who many see as a reasonable proxy for Bernanke himself--said that the Fed hasn't decided on timing or steps of tapering, and that such a decision would require 3-4 months. He further noted that the Fed wants to make sure markets don't overreact when that time comes, essentially confirming the current "conspiracy theory" of some evidence of "tapering talk" likely contained in today's Minutes, and the preceding scramble to get the word out over the past two weeks.
Bonds got a boost from weaker-than-expected Retail Sales in the UK, which clearly marked the turning point at weakest levels overnight. 10yr Treasuries moved from the mid 1.94's to 1.921 and coasted into the domestic session mostly sideways, but with some pre-Bernanke volatility. The Fed Chairman appears this morning in front of the Joint Economic Committee at 10am. As a "for instance" on the this speech being today's dark horse market mover, RBS characterized it as the "most appropriate opportunity" to get a "signal that tapering in the size of the Fed's monthly purchase pace is imminent."
10 yr Treasuries are currently down 1.4 bps from 5pm at 1.9159 and Fannie 3.0s are up 5 ticks at 102-29. Stocks are slightly higher vs yesterday's 4pm levels, but haven't made it back to yesterday's highs.
Live Chat Featured Comments
A recap of the featured comments from the
MBS Live Dashboard's Live Chat feature
, utilized by hundreds of industry professionals each day.
: 11:05 AM - AMC
: 11:04 AM - Franklin American
: 10:59 AM - Flagstar
: 10:57 AM - 360 Mortgage
: 10:57 AM - Quicken Loans Wholesale
"Weird morning. Who wants to bet any reduction this year in the Fed buying Treasuries mirrors the reduction in the need for the US to sell debt? "
Oliver S. Orlicki
"look at this movement"
"this is an unbelivable trading range"
"Treasuries really selling off quicker now"
"Gettin ugly fast"
"That's the one that hurt the most, I'd think. "Step down in next few meetings""
"RTRS- BERNANKE, ASKED IF FED COULD ACT BEFORE LABOR DAY IN EARLY SEPT., DECLINES TO PUT A DATE ON WHEN FED MIGHT CHANGE PACE OF PURCHASES "
""Desire to get back to a predominantly Treasury security portfolio." !!!! "
"why the pullback? / I just came back to my office / Did Ben say anything to cause the selloff?"
"ugggghhhhh. It was nice while it didnt last"
"15 min, 8 ticks gone...."
Oliver S. Orlicki
"why we shooting up like this?"
"RTRS- BERNANKE REMINDS CONGRESS SLOWNESS OF US RECOVERY CAN BE EXPLAINED BY HEADWINDS INCLUDING FISCAL DRAG "
""Could take a step down in the pace of purchases in the next few meetings.""
"expect volatility as every word that Ben utters is going to be parsed"
"wow don't like that comment"
""Desire to get back to a predominantly Treasury security portfolio." !!!!"
""we could normalize policy by simply letting securities roll off and I think there are several advantages of doing that.""
""not necessary to sell MBS""
"RTRS - BERNANKE SAYS FED WILL GRADUALLY REDUCE THE FLOW OF ASSET PURCHASES IF LABOR MARKET IMPROVES IN A REAL AND SUSTAINABLE WAY "
""As economic outlook improves in a sustainable way, the committee will reduce purchases.""
"No, it could go either way. I'm just saying the recent rally is a setup for the Fed minutes."
"scott are you saying the minutes will boost the rally?"
"Let's see what the Fed minutes do to that. This is just front-running that. Along with the dovish Fed speak"
""would endanger recovery""
what our user's have to say
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About the Author
Chief Operating Officer,
Mortgage News Daily / MBS Live
A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators. ...
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Mortgage Consumer Advocate,
Escape From Pottersville
Once again, days like today are really not that stressful after four years on this site. Rather than being panicked by what on the surface might seem like a massive one day move that will forever change the future of originating loans in my pipeline, I have the perspective of charts, and analysis that really balance out where we've been and where we're going. As ugly as today was, in the overall scheme of things, it's just part of another up and down cycle that we've been playing out for four years now. Maybe tapering is in the near future. Or maybe it's just the market sentiment du jour, and we'll have to live with it for a little while. If there is a healthy supply of new qualified buyers, then higher rates won't be a problem because plenty of purchases will be in the pipe. If housing prices are truly on the path to a sustained upswing, then recent HARP refis will be eliglble for LPMI deals and eventually into no MI deals down the road. If the values don't go up, qualified buyers don't show up, then inevitably, rates will have to go down to draw in some refi demand, and the circle of MBS life will continue. GUTFLOP. It's a traders world, and we're just living in it. All stuff I never would have known were it not for MBS Live. Lord knows how many thousands of dollars it would have cost my customers if I hadn't had the sense to join MBS live in 2008. Honestly, you've got nothing to lose by trying out MBS Live except maybe thousands of dollars of credit towards your customers costs on the next mid day reprice you had no idea was about to hit your rate sheets.
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