"So long MBS and thanks for putting up with all the abuse!" That might be a caption for today's Employment report. In a way, it's like a consolation prize for mortgage-backed-securities, which continue to look relatively doomed to move into weaker and weaker territory as tapering turns into tightening. Today's data provided a brief sigh of relief in that it wasn't the 240-300k payrolls print that history says can happen. Such a 'beat' could have tipped the scales toward December tapering and generally accelerated the perceived time frame in which MBS sponsorship from the Fed will expire.
Instead we got numbers that keep asset purchase reduction looking about as likely as it did yesterday. MBS were prepared for the outlook to worsen. It didn't. They rallied. End of story. So to be very clear, until and unless we get some new, substantial piece of new information (really, it would have to be something of a game-changer), today's can't be as sustained and substantial as we'd like it to be. Is it just a consolation prize for the game that we appear to have lost? Yes. The better question is whether we can be consoled for more than just one afternoon. Don't take anything for granted in that regard. It could extend a day or two or three, but then again, it might not. Stay frosty.
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 4:05 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 At New Highs Heading Into Final Hour
MBS are undergoing a watered-down version of a short squeeze at the moment. Whereas they hadn't been too popular compared to Treasuries in recent weeks, the 'not-too-crazy' Employment data this morning keeps risk of December tapering fairly minimal (some would debate this). This in turn keeps liquidity as high as it can be during a very illiquid time of year, and helps MBS relative to Treasuries.
As hinted at, some market participants see today's data as suggesting a higher likelihood of tapering. In that case, the outperformance doesn't make as much sense. Whatever the case, there is solid demand for MBS from accounts other than the Fed for the first time in several sessions. Those who had been betting against mortgages are being forced back in, and any accounts that waited to do this until this afternoon are now looking at a bit higher level of urgency. That's reflected in the late-day price spike, but unfortunately, more indicative of tactical considerations as opposed to long term strategy.
Fannie 4.0s are now up an impressive 13 ticks to 103-26 while Treasuries are still hanging around unchanged levels with 10yr yields at 2.8571
Live Chat Featured Comments
Matt Geiszler : "I saw a post yesterday regaring CoreLogic increasing credit report prices to $75. This is incorrect. The $75 fee is for a very robust credit supplement. Tri-merge prices are increasing about $0.40 per bureau, so less than $1.50 for a full tri-merge. Just wanted to clear up any confusion."
Matthew Graham : "Yeah Paul. There's some flexibility between 4.25 and 4.375, and again between 4.75 and 4.875, depending on how GSEs are paying for the loans. But it's always going to be one or the other. "
Paul Philbin : "MG I know I've asked this before, but what rates are included in the 4.0 coupon. 3.875% - 4.375% ?"
Matthew Graham : "4.0 is certainly the sweet spot."
Ted Rood : "4.0 at the moment, BMay,unless you're planning on charging/paying discount points."
BMay : "Which chart should I be watching 3.0, 3.5 or 4.0?"
Dave Pressel : "it seems the pattern has been with multiple bad days that once we get some momentum we get multiple good days....could be wishful thinking but it's just my $.02"
Matt Hodges : "one locked this morning, 3 more floating"
Paul Philbin : "So a question for the risk takers that floated their loans. We've got better pricing today so do you lock it up or keep floating? I'm talking pipeline closing in Dec"
Matt Sullivan : "REPRICE: 1:43 PM - Fifth Third Mortgage Better"
Scott Valins : "REPRICE: 12:28 PM - Cole Taylor Better"
Scott Valins : "REPRICE: 12:28 PM - 360 Mortgage Better"
Leo Hefner : "REPRICE: 12:15 PM - Flagstar Better"
Leo Hefner : "REPRICE: 12:14 PM - Quicken Loans Wholesale Better"
William Hansen : "REPRICE: 12:12 PM - Sun West Mortgage Better"
Craig Stanislaw : "REPRICE: 12:12 PM - Wells Fargo Better"
William Hansen : "REPRICE: 12:11 PM - NYCB Better"
Ashley Sanchez : "Sung this is the best with examples...http://benefits.va.gov/homeloans/documents/docs/guaranty_calculation_examples.pdf"
Sung Kim : "how do I calculate entitle already used on a VA loan?"