Bond markets got off to a rough start in December. After moving modestly higher in Japan and more convincingly higher in Europe, interest rates only managed to tread water for a few hours this morning before the stronger-than-expected ISM data sent MBS and Treasuries to their weakest levels of the day. It's really about that simple. After the initial bout of selling pressure right at 10am, prices bottomed out by noon and went almost perfectly sideways from there. The rest of the week can continue to nudge trading levels from here, and the more data that beats forecasts, the more markets will be getting in position for Friday's NFP to do the same. In a way, that's good news, because if NFP is merely "as expected," bond markets may have some guard to let down.
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 4:02 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
MBS Hit New Lows; Negative Reprices Can't be Ruled Out
Fannie 3.5s are now about half a point lower on the day at 100-12. 10yr yields are just now pushing into new highs, up 6bps at 2.8024. Lenders who released rate sheets before this morning's ISM data may be considering negative reprices.
Live Chat Featured Comments
Jeff Anderson : "Once the taper begins I think the move up could be even more violent than I thought before based on the article in the news stream earlier today. http://www.bloomberg.com/news/2013-12-02/citigroup-to-bofa-spurn-treasuries-to-hoard-cash-on-taper-risk.html. I'd think they would shrink purchases even more until the dust settles although I think March is the earliest for any taper. Definitely on the defensive here."
Matt Sullivan : "REPRICE: 1:02 PM - Fifth Third Mortgage Worse"
Eric Franson : "REPRICE: 12:23 PM - Wells Fargo Worse"
Roger Moore : "REPRICE: 12:19 PM - NYCB Worse"
Steve Chizmadia : "Careful what you ask for DM"
Victor Burek : "probably be some coming shortly"
David McBride : "How come no repricing? "
Mark Egolf : "I agree. THe trend is higher and the economy is better. The CEO of Dow said he felt the economy is growing at 2.5% which is pretty solid given the political landscape. "
Steve Chizmadia : "I think frustrations are magnified after a November in which we lost 220 bp (from close on 10/31 through close of 11/29) on the 3.5 coupon. "
Christopher Stevens : "We were at 2.73 back on 7/5 and closed around 2.75 on 11/26. In between we have seen 2.99 and then 2.52. Seems we are dacing all around 2.75 (dead center). It feels like the 10YR wants to move up and I am prepared for a 3-3.25 in Q1. It would take some bad economic news to push this yield below 2.75 with any conviction. (imo)"
Michael Gillani : "I know what you're saying MG and agree with the big picture backdrop reality. It's just frustrating, especially with rate shopping clients. If you lock em, then a week or two later there's a big dip and someone else is quoting them lower, if you float them, this happens and you get jacked as well. It's almost a lose lose situation in this highly volatile environment. There's my Monday morning vent. I know it's the nature of the beast and it is what it is and thankfully this site makes livin"
Matthew Graham : "Any stability and positive trends should be assumed to be temporary opportunities against a larger, weaker backdrop (until/unless the economy double dips in a bigger way than it looked like it might have heading into this Fall)."
Andrew Benson : "Michael: yeah I know what you mean."
Michael Gillani : "The past 7 months in this business have added more grey hairs than I'd like. Everytime it seems we may be rounding a corner for some stability and positive trends, we get whacked back into submission very quickly. "
Roger Moore : "key up the counting crows song "
Michael Gillani : "So with this selloff and a beat on ADP, jobless claims and NFP and then a Fed taper start, this could possibly go down as the worst December on record for MBS and Treasuries? Worst case scenario obviously for us."
Michael Gillani : "What's with this massive weakness? Wed got hit hard and now today. Between the two days, it's worse than the FOMC whack!"