Bond markets began the day relatively close to Tuesday's latest levels and were soon in rally mode owing to the weaker-than-expected ADP Employment numbers. Whether the 166k vs 180k miss wasn't big enough to motivate more of a rally or markets are simply trading cautiously amid uncertainty, 10yr yields only managed a 4 bp rally from 2.645 to 2.605. Later in the morning, technical and tradeflow-based buying pushed yields down to 2.592 before running out of steam. MBS were able to come along for the ride with Fannie 3.5s topping out at 101-31.
Everything after that was uneventful as both sides of the market returned to technical support precisely in line with their weakest post-ADP levels (shown in chart below). Markets are still hungry for NFP and still wondering if there's a possibility to get those numbers by Friday.
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 4:06 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
Losing Ground into Afternoon Hours; Still Positive on the Day
From 101-31 highs, Fannie 3.5s have fallen 7 ticks into the afternoon hours, currently at 101-24. Reprice risk is probably not a factor here considering we're still up 9 ticks on the day, almost no one repriced positively earlier, and rate sheets began the day in conservative shape.
That assessment is only valid for right now, though, and one or two negative reprices couldn't be altogether ruled out.
More importantly, the trend since 11am has been back toward higher rates and lower prices. If 10's break above one or both of the overhead technical levels of 2.623 and 2.628, that would make for an increasingly risky environment for MBS and reprices. We're right on the edge right now.
MBS Hit Highs; Positive Reprice Potential
After running into resistance at first, Treasuries and MBS have extended their post-ADP gains this morning, bringing Fannie 3.5s to their best levels since June 19th. The improvement is moderate so far, being up just 2 ticks from previous highs. Similarly 10's worked their way down to 2.596 from previous lows of 2.603.
Short-covering (buying bonds to close out bets on higher rates), asset-allocation trading (changing balances between stocks and bonds), and tactical considerations surrounding the Fed's daily buyback have all helped Treasuries since 9:20am. Treasuries in turn, have helped MBS.
Current gains may be sufficient for some lenders to consider a positive reprice, though we'd note that it already looks like this leg of the rally has leveled-off.
Live Chat Featured Comments
Matt Hodges : ""USBHM will re verify income with the IRS on all files delivered without tax transcripts due to the shutdown. This policy will be strictly adhered to.""
Matt Hodges : "USBank will required 4506t, but allow to close without IRS return"
Dan Clifton : "Flagstar as well waived 4506-ts (most products)"
Dan Clifton : "NYCB is not requiring 4506-ts"
Matthew Graham : "market data tab on MND is the best place to look for that kind of thing. If you're looking for something that's not there, let us know and we'll let you know if we can add it. http://www.mortgagenewsdaily.com/data/treasuries.aspx"
Tom Bartlett : "Hi MG. Do you guys have the indexes like the Libor listed with the rates on them anywhere?"
Dave Christensen : "Just attended a QM webinar. It struck me again that really QM is telling borrowers that if they get in over their head, it's not their fault. Most likely it's the lender's fault for giving them the loan and therefore they don't need to take personal responsibility and can sue their lender for giving them the loan. If they somehow got away with lying about their income, that’s not their fault either – the lender should have figured out that they were lying and therefore they can still sue thei"
Timothy Baron : "That question has come up a lot lately. The search feature ought to yield a lot of info on the topic."
Timothy Baron : "as long as at least one original borrower remains"
Victor Burek : "think it is allowed for any reason now"
Dustin McAlister : "What are the rules on removing a borrower from a current loan for HARP? is it just death and divorce? "