Bond markets have been utterly silent so far today with stable, narrow trading ranges, no significant events, and limited volume. Treasuries held a 3bp range overnight, but gradually improved from 2.87 to 2.84 in 10yr Notes. MBS opened in line with Friday's latest levels and improved several ticks. There's not much to offer by way of explanation for the day's movement so far apart from the less overt "tradeflow considerations
." Traders who had been betting on rates moving higher (and there are quite a few from various points around the late October run to the lowest rates since June) took Friday--and to a lesser extent, today--to cover those short bets (which means buying bonds). This comes across as a positive influence for bond prices, even though it's not for reasons that speak to ongoing positive momentum.
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Pricing as of 11:05 AM EST
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Bond Markets Moderately Stronger in Quiet Trading, Limited Calendar
Treasuries were docile overnight. Volume was fairly light, as was motivation, with the most significant trading cues coming from the observation of other trades (rather than economic data and events). Slightly weaker German Industrial Production and Eurozone Investor Confidence perhaps had a mild positive effect, but that's a stretch.
10yr yields began the night at 2.87 and worked their way down to 2.846 by the domestic open. Fannie 4.0s opened right in line with Friday's latest levels and are currently up 3 ticks at 103-28.
There is no significant economic data on the calendar today with the only potentially relevant events being 3 Fed speeches at 12:50, 1:05, and 2:15pm. There are two instances of scheduled Treasury buybacks from the Fed (usually just one/day), and with the limited calendar, we could see some tradeflow motivation around the conclusion of these at 11am and 2pm.
Live Chat Featured Comments
Clayton Sandy : "Steve, I do have quite a few people like that. Two of them had foreclosures 4 years ago and don't want to wait. And I'm hoping it gets revised up, but I do have on buyer at the $729k max. All the others are between $450k-$600k. "
Matthew Graham : "I want to say 'no' AP, because they're not very high on my list, but we've seen markets react to just about every Fed speaker at times depending on what they say. That said, I'm not sure what they could say that bond markets aren't already accounting for. So I'd say just hint of concern by default."
Andy Pada : "should we be concerned about the 3 Wisemen speaking today?"
Ira Selwin : "Or you can always check the website: https://entp.hud.gov/idapp/html/hicostlook.cfm and use the dropdown for CY2014 to search for a particular area"
Ira Selwin : "There are two attachments on the mortgagee letter website. High cost areas (allowed up to $625k), and areas between the floor ($271,050), and the ceiling ($625,500). If it is not listed, then the max is $271,050"
Steven M. Sims : "Clayton, there is a review process. I will be surprised if Salt Lake Co doesn't get increased"
Gaius Rossini : "Ira - listing of the high cost and in-between counties... does that show everything? are there counties that are changing that aren't listed there?"
Ira Selwin : "That is only for "high cost" areas. So not all areas are eligible to go up to the $625k"
Gaius Rossini : "clayton - you serious? I thought it drops from a max of $729 to the conventional $625K."