Overnight markets were relatively uneventful with moderate weakness for Treasuries during Asian hours and a slight recovery during European hours. Treasuries and MBS began the day just barely lower in price vs yesterday's latest levels. Gains began even before the 8:30am Trade Deficit data, but progressed minimally thereafter. In a general reversal of the Syria-driven flight-to-safety yesterday, equities markets surged at the 9:30am opening bell and bond markets have weakened somewhat. Today's headlines increase the odds of UN involvement which makes the situation relatively less volatile for the US specifically.
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 11:07 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
Bond Markets Weaken Into Equities Session; Reprice Risk Mostly Contained
Treasuries and MBS moved into weaker territory at the 9:30am opening bell for stocks. MBS trading has been less than less than liquid, but 4.0s were briefly as low as 102-20 (currently 102-22), down from 102-26 highs.
The bounce back comes after Treasuries put in a supportive bounce at 2.867. Any price action within this range for MBS likely keeps negative reprice risk out of the picture, though that's a safer assumption here at 102-22 than it was at 102-20.
Additionally, the brief swoon and recovery give us a good line in the sand to watch for any potential reprice risk later today. In other words, falling past 102-20 would be a good early indicator of risk if it happens later in the session.
Bond Markets Tiptoe into Postivie Territory After Quiet Overnight Session
Asian Trading hours saw a modest amount of weakness for Treasuries with 10yr yields rising from 2.86 to 2.88. This ended up being the range for the rest of the overnight session despite stronger economic data during European hours.
Treasuries hit the domestic session in just slightly weaker territory, but a modest rally was underway even before the Trade Deficit data. That said, the data had a small positive impact.
10yr yields are down to 2.854 and Fannie 4.0s are up 3 ticks to 102-26 after opening down 2 ticks at 102-20. There is no more significant data on the calendar today.
ECON: Trade Deficit Slightly Wider Than Expected
- Trade Deficit $39.15 bln vs $38.7 bln forecast
- Exports -0.6 vs +2.2 previously
- Imports +1.6 vs -2.2 previously
- China Trade gap $30.08 vs $26.65, largest on record
- Oil import price $97.07 vs $96.93<
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce,
announced today that total July exports of $189.4 billion and imports of $228.6 billion resulted in
a goods and services deficit of $39.1 billion, up from $34.5 billion in June, revised. July exports
were $1.1 billion less than June exports of $190.5 billion. July imports were $3.5 billion more
than June imports of $225.1 billion.
In July, the goods deficit increased $4.5 billion from June to $58.6 billion, and the services
surplus decreased $0.1 billion from June to $19.4 billion. Exports of goods decreased $1.1 billion
to $132.7 billion, and imports of goods increased $3.4 billion to $191.3 billion. Exports of
services were virtually unchanged at $56.7 billion, and imports of services increased $0.1 billion
to $37.3 billion.
The goods and services deficit decreased $4.3 billion from July 2012 to July 2013. Exports were up
$6.1 billion, or 3.3 percent, and imports were up $1.8 billion, or 0.8 percent.
Live Chat Featured Comments
Ira Selwin : "Right? Our main reverse guy said he was goign to have a breakdown for us. I asked him - fromt he letter or mentally. "
Paul Carlin : "Ira, reading it now and going cross eyed. FHA knows how to make an exciting letter. "
Ira Selwin : "Anyone attempt to interpret the new mortgagee letter regarding reverse mortgages ? 40 pages of one letter, and another 59 for the guide."
Mark Egolf : "i say 175,000 but the fourth quarter had me worried. I don't know if the economy can accept higher interest rates. Hopefully I am wrong"
Jason Anker : "Anecdotal econ info I’ve gathered shows lots of activity so I’m going with 200k+ jobs. takers?"
Jason Anker : "no, filed info was wrong, didnt match 1099s W2s etc. "
Joe Bydzovsky : "jason, so did the IRS correct the typo and this is why the transcript is different? "
Jason Anker : "yes - I have a had typo problems, numbers won't match but only 1 1040 filed. If the typo was small like yours then it was not a problem for me. Did an LOX and closed loans. "
Joe Bydzovsky : "has anyone ever had an issue with a borrowers taxes (self turbotax prepared) not matching the transcripts? There is a few small differences in student loan interest and dividend income. We both logged in to TurboTax and confirmed there is only one set of 1040's filed.. and they don't match. total difference is about $124 to the AGI. "
Andrew Benson : "that's on refis. purchases we require everything prior to lock."
Andrew Benson : "we have about 80% that actually get everything in 3 days, but actual lock fallout of about 3%"
Andrew Benson : "heh. nothing. we broker and most of our investors want file within about 10 days. anyway, we read the borrower a script that the rate lock is our commitment to their rate and cost, and their commitment to go ahead.. and that they understand they have only 3 business days to get everything in, and if they can't commit to that, they cannot lock now... bla bla..."
Jon Bodan : "I won't risk that, too much exposure on pullthrough ratios. "
Andrew Benson : "We lock at application, but require all income/asset/disclosures within 3 business days."
Jon Bodan : "same here, I never lock until I have all of the documents from the borrower. I have a disclosure that I even put that in writing and make them sign."
Victor Burek : "I don't lock til I get docs back from client"
Erik Grimmer : "Everyone locking everything at time of app?"
Matthew Graham : "RTRS- US-OPEC JULY TRADE DEFICIT $7.44 VS JUNE DEFICIT $5.76 BLN "
Matthew Graham : "RTRS - US JULY OIL IMPORT PRICE $97.07/BBL VS JUNE $96.93/BBL, +3.6 PCT FROM JULY'12 $93.71/BBL "
Jeff Anderson : "Imports +1.6 = oil prices?"
Matthew Graham : "RTRS- US JULY EXPORTS -0.6 PCT VS JUNE +2.2 PCT, IMPORTS +1.6 PCT VS JUNE -2.2 PCT "
Matthew Graham : "RTRS- US JULY TRADE DEFICIT $39.15 BLN (CONSENSUS $38.7 BLN) VS JUNE DEFICIT $34.54 BLN (PREV $34.2 BLN) "