Focusing too closely on the events and market movements of this single session could make for challenging and unsatisfying analysis. Instead, if we look at the past two days, things make more sense. Essentially, MBS and Treasuries were in rough shape after yesterday's morning's ISM data. They were partially "revived" by the geopolitical risk trade surrounding Syria, but they only participated in the same halfhearted way that they have been on other big 'flight-to-safety' moves of the past few weeks.
Today's economic data was uneventful and left rates vulnerable to being pushes up in the same halfhearted way they were pulled down yesterday. The damage was worst for shorter duration securities (like 2-5yr Treasuries vs 10's, or Fannie 4.0s and 4.5s vs Fannie 3.5s). There are more places to assign blame than sticks to shake at them, but with today's high 10yr yields just under yesterday's highs, it's much ado about nothing compared to the next two days of data. The week officially begins tomorrow.
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 4:07 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
Negative Reprice Risk Increasing (Yet Again)
Bond markets had been selling off in a fairly linear manner from this morning's stock market open, but have recently edged into a more aggressively negative stance. 10's are now up to 2.895 and Fannie 4.0s are at their lows of the day at 102-14. Any lender who has not yet repriced negatively is likely to do so sooner vs later. Some lenders will be back for another pass even if they've already repriced once.
Sell-Off Accelerates; Negative Reprice Risk Increases Again
We've now seen the first few negative reprices of the day and prices have deteriorated enough since the last alert that more lenders are at risk. Fannie 4.0s are now down 6 ticks on the day to 102-18 and 10yr yields are up over 2.88.
Negative Reprice Risk Increasing as MBS Hit Lows
Fannie 4.0s aren't technically there yet, but 3.5s just hit lows of the day at 99-05. 10yr yields are testing 2.87--their highest mark since before the 8:30am data--and Fannie 4.0s are spending more time now around previous lows of 102-20 to 102-22. This brings us to the leading edge of negative reprice risk where some lenders, but not most, may be considering it. A definitive break below 102-20 in Fannie 4.0s would increase the risk to moderate levels and a move to yesterday morning's lows near 102-16 would make the risk more pervasive.
Live Chat Featured Comments
Jon Bodan : "I had this but wasn't sure if it was the most updated version: https://www.fanniemae.com/content/announcement/sel1005.pdf"
Jason Zimmer : "foreclosures, yes. not sure about DIL"
Jon Bodan : "hey all - FNMA post deed in lieu guidelines are still 2 years at 80%, 4 years at 90%, and 7 years otherwise, correct?"
Matthew Graham : "RTRS- WILLIAMS: MBS PURCHASES ARE MORE EFFECTIVE THAN TREASURIES, WANT TO KEEP BUYING THEM UNTIL END OF QE3 "
Matthew Graham : "RTRS - FED'S WILLIAMS: GOING INTO SEPTEMBER FED MEETING WITH AN 'OPEN MIND' ON WHEN TO REDUCE BOND BUYING "
Amitab Mukerjee : "Loving the mobile site! "
Jude Bridwell : "Naturally, I also had a couple wanted to price before this morning before things got worse"
Ted Rood : "Well, since OB is down, going to float for now."
Jude Bridwell : "Feelings on next two days? Most of y'all locking or floating"
Morgan Hammer : "wow having to lock today is going to suck. either be a hero or a zero depending on Thurs/Friday news. "
Matthew Graham : "RTRS-MEMBERS OF U.S. SENATE FOREIGN RELATIONS COMMITTEE SAY THEY EXPECT PANEL TO VOTE LATER ON WEDNESDAY ON DRAFT RESOLUTION FOR USE OF MILITARY FORCE IN SYRIA"
Rob Clark : "REPRICE: 12:40 PM - Provident Funding Worse"
William Hansen : "REPRICE: 12:37 PM - NYCB Worse"
Matthew Graham : "RTRS- FED'S WILLIAMS: REDUCING BOND PURCHASES LATER THIS YEAR AND ENDING THEM MID-2014 IS 'BEST COURSE FORWARD' "
Jason Zimmer : "12 has been my experience"
Jason Anker : "there is no written guide on that, up to the algo in DU"
Sergio Szyrko : "Can someone tell me if it's 6 months or 12 months reserves where DU would allow up to 50% DTI on a conventional 80% LTV?"
Nate Miller : "not sure if your approved with Freedom mtg, but they sent out an email yesterday saying they will take other lenders appraisals now...could be an option"
Nate Miller : "you can get 85% c/o on conv/conf, that's an IB overlay"
Chip Harris : "So I have an appraisal that came in low. Shocking, I know. This is a cash out because the borrower refinanced their 2nd when they re-did their first. Interbank woin't do cash out over 80% because of MI. Is that an MI company guideline of should I be looking elsewhere?"