Today was another session where the movement is best characterized as "incidental"--that is to say, bond markets didn't set out with any salient goals in mind. Instead, movement arose in response to several events such as bullish equities, daily Fed bond buying, a 30yr TIPS Auction, and various headlines. All of the above competed with an underlying will to remain mostly sideways ahead of next week's month-end trading and FOMC Announcement. That having been said, compelling economic data may well do the trick of massaging trading levels higher or lower in the absence of NFP's blunt force trauma, but we didn't see anything compelling today. It will be hard for tomorrow to deliver in that regard as well, with only Durable Goods, Consumer Sentiment, and Wholesale Inventories.
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 4:08 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
Stronger Since Treasury Close; Reprice Risk Waning
Since the 3pm Treasury close, both Treasuries and MBS have bounced back a bit from their weakest levels. Fannie 3.5s hit 102-17 and 10yr yields were as high as 2.522. They've since eased to 102-19 and 2.512 respectively, moderately reducing the negative reprice risk that had been building at the time of the last alert. Negative reprices still can't be completely ruled out, but we're in better shape than we were.
MBS Hit New Lows; Negative Reprice Risk Now Moderate
Up until now, negative reprice risk had been small enough that we wouldn't necessarily expect to see one. With the last two ticks of weakness, we probably will see a few, but still nothing widespread. Fannie 3.5s are down 3 ticks on the day now at 102-18. They had been holding near 102-20.
Bond Market Remains Under Pressure; MBS Outperform
Just a heads-up: 10yr Treasury yields are at their 2-day highs, up 2.5bps on the day at 2.51. Fannie 3.5 MBS are still unchanged, but keep in mind that's compared to yesterday's saggy 5pm levels. Thus far, MBS have managed to hold support at 102-19. If Treasury yields are forced any higher, the support in MBS stands a good chance of breaking, which would lead to increased reprice risk.
All this is much ado about nothing at the moment as the trading range is narrow and volume is low. But we'd keep an eye on these range boundaries as today's line in the sand between risk levels. In other words, some small risk already exists, but it's on the verge of increasing if leakage in Treasuries spills over to MBS.
Live Chat Featured Comments
Matthew Graham : "RTRS- REGULATOR SAYS IT WILL PROVIDE SIX-MONTH NOTICE BEFORE LOWERING THE CAP ON LOANS FANNIE, FREDDIE BACK "
Matt Hodges : "curbing the volume of new apps may be the intended outcome"
Matt Hodges : "GR - WF "prior approval" - stuff that correspondents aren't allowed to u/w went from 3 bus days to 7-10 recently"
Ken Crute : "they just laid off thousands of ops staff, they probably are not staffed to handle a new surge "
Gaius Rossini : "the wells posted fha rate went from 4-1/8 to 3-7/8 today and then back up to 4-1/8... whenever that happens, we here on the secondary market side think that once they lowered it, they saw a huge rush of demand and had to raise it back to stem the tide"
Jason Anker : "correct"
Scott Valins : "so no specific agency restrictions, just lender overlays?"
Sung Kim : "overlays though"
Sung Kim : "no"
Scott Valins : "is there a 90 day waiting period for getting Fannie financing on a flip? Home has to have been owned by flipper for atleast 90 days? "
Sung Kim : "if you can demonstrate 25% equity it doesnt matter"
Sung Kim : "that's an increase in family size as well, but differnt MSA for the new property strengthens the case"
Randy Fenton : "Must go FHA due to DTI"
Randy Fenton : "Dad and son bought the home and son wants to move out with new wife. My underwriter said no because it was not a court ordered move out. "
Jason York : "usually about 6 months Charles, but I would check with your secondary to see what your recapture time is"
Randy Fenton : "FHA question- has anyone been able to use the FHA Exception "Vacating a jointly owned property" to allow a current co-borrower on an FHA loan to move out and to purchase another primary (using FHA) without a court order like a divorce decree? "
Charles Tadros : "How long must a client wait after a purchase to refi to avoid LO loosing his commission? Lender would be Flagstar"