Bond markets put on a clinic today, demonstrating just how intent they are on doing absolutely nothing. It may not have seemed like much of a feat, but in the context of a 20pt S&P sell-off, a 10yr Treasury yield that hits the close within 1bp of yesterday's close is quite something. MBS were more willing to distance themselves from yesterday's latest levels by comparison, but only by about an eighth of a point. All told, we continue to witness one of two things: either an intense desire to stay near current levels or an even more intense desire to avoid committing to a bigger move in either direction without the benefit of economic data. FOMC Minutes and 10yr Auction 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
Back to "Hovering" Now; Reprice Risk Ebbs
Negative reprice risk has abated as bond markets have generally improved in the hour since the 3yr Note auction. That said, the previous rally after the 1-mo Bill auction looks to have set up a floor of resistance in longer-term Treasuries, so we're not quickly stampeding back into positive territory as much as we are trading within a tick or two of unchanged levels--both for Treasuries and MBS.
President Obama is scheduled to speak presently
Weaker Ahead of 3yr Auction; Negative Reprice Risk for Some
The bounce back mentioned in the last update has continued and MBS are now in weaker territory than they were before the quick rally to the highs of the day. For lenders who repriced positively after that rally, there's a slight risk of negative reprices at the moment, though we'd likely need to see more weakness before initial rate sheets were effected. Fannie 3.5s now down 4 ticks on the day at 101-20. 3yr auction results coming right up.
T-Bill Auction, of All Things, Helping MBS to New Highs; Impact Fading Now
This may be one of the first mentions of short term T-bills in an MBS Live alert, and certainly the first time that they've been credited as a relevant market mover. That's because they simply don't move markets in a way that impacts MBS--not until just now, anyway.
It's this whole "default" thing. Wires were out earlier today about the 1-month T-bill rising above LIBOR for the first time in 12 years. As the deadline for the debt-ceiling approaches, the shortest term debt gets hit the hardest. When short term debt gets hit, it's not uncommon for longer term debt to experience some level of benefit. The recent move into positive territory for MBS is no more complicated than that.
T-bills were already hurting, and they got hurt some more after the auction. 10yr Treasuries experienced their heaviest volume of the day and best gains in concert with the T-bill weakness. Fannie 3.5s moved as high as 101-27, but have since fallen back to 101-25, 2 tick up on the day.
Live Chat Featured Comments
Ted Rood : "Key is sourcing the funds used to pay off the account."
Michael Ullmann : "ok that is what I have done in past. This is a wells specific guidline. Thank you and I will have to ask for an exception"
MMNJ : "Your UW is wrong -- needs to show proof of available funds to payoff, copy of letter closing account and supplement showing account closed"
Victor Burek : "what fph says..but there could always be a lender overlay"
FPH : "so long as you can documnet where funds to payy off account came from"
FPH : "if account is closed prior to closing it can be done."
Michael Ullmann : "quick scenario: conventional rate and term refi, want to pay off a credit card due to a dti issue. Borrower will close account and we will order a supplement. I have done this in the past and sold to Sunturst (less than 1 year ago.) My u/w is telling me this can not be done. Is this correct or a wells specific guideline? Granted I can withdraw the application have the borrower pay off and close then repull credit and start the application, however the u/w will likely ask to see the original cre"