Referring to today's movements in MBS with the word "volatility" may be a bit generous considering we haven't even traversed half of yesterday's range, but when prices whip up a quick 6 ticks and right back down 6 ticks for no apparent reason, it's almost justified. Part of the problem is the lack of actionable data. Without the bigger-picture economic data that bond markets crave, traders are left to react to headlines and other typically less relevant considerations while attempting to simply subsist and endure until the bigger-picture data returns.
The most recent contender among these lesser market movers is the activity in the short term Bill market. 1-month T-bill rates rose above LIBOR for the first time in 12 years earlier this morning, and a bumpy auction at 11:30am sent them higher still. The chart below shows how they've fared in the past 2 months and how the last few sessions compare to the 2011 debt-ceiling debate/resolution/can-kicking.
This was enough for some movement in MBS after the auction, but Fannie 3.5s are already back in line with levels from the pricing snapshot below (11:08am).
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 11:08 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 Weaker After European Session
Treasuries began the overnight session in slightly better shape than Monday's close and remained in Monday's range until European markets opened. At that point, there was a marked pick up in volatility and Treasuries moved into negative territory.
The pressure remained through the domestic open, though volume is still light. 10yr yields whipped up to 2.66 just before 8:30am and are now back down to 2.648. Fannie 3.5 MBS were as low as 101-17 at the same time, but have similarly bounced back to 101-19.
These movements aren't easily attributed to any events in the marketplace. Low volume and increased volatility have been the biggest factors amid the lack of data. Today's 3yr auction is at 1pm and could offer some guidance.
Live Chat Featured Comments
Victor Burek : "they will probably issue some kind of calendar of events"
Ross Miller : "when the gov't restarts do we get a flood of information released or will they just wait for next month and release 2 months of data?"
Jason Anker : "William - there is no issue there unless you have overlays, rental history to use rental income is an overlay if thats what you are worried about"
William McGuirt : "first time home buyer purchasing owner occ 2 family and another rental 2 family..no mortgage history..is this an issue?"
Matthew Graham : "RTRS- U.S. 1-MONTH BILL RATE RISES ABOVE 1-MONTH LIBOR FOR FIRST TIME IN AT LEAST 12 YEARS-REUTERS DATA "
Matthew Graham : "RTRS- IMF SAYS FAILURE TO PROMPTLY RAISE U.S. DEBT CEILING COULD 'SERIOUSLY DAMAGE' GLOBAL ECONOMY "
Matthew Graham : "RTRS- IMF TRIMS GROWTH FORECAST FOR UNITED STATES TO 1.6 PCT FROM 1.7 PCT, SEES 2014 GROWTH AT 2.6 PCT, DOWN FROM 2.7 PCT "
John McClellan : "If they go Fannie and they own a primary now"
Robert Rippy : "Can someone purchase an investment property that has a renter in it already and get credit for any of the rental income for debt ratio purposes?"