MBS RECAP: Bond Markets Inch Back Toward Positive Territory After Volatile Morning
The 'after-hours' session (3pm-5pm, following the close of Treasury pit trading) is seeing an ongoing trickle of sideways to slightly stronger prices in MBS. The Treasury yield curve is flagrantly favoring the shorter maturities--part of a two-day correction to an even bigger move away from shorter maturities that began in earnest last week.
In plainer terms, this means that yields on 2-5yr Treasuries were rising faster than yields on 10-30yr Treasuries until Friday, and now the opposite has been the case. In fact, 2-5yr yields fell today while 10yr and 30yr maturities are slightly weaker/higher.
As part of the their relationship with Treasuries, MBS tend to correlate best to the Treasuries with the most similar durations. Of course MBS don't have a fixed duration because borrowers can sell or refi any time. As such, the average life of an MBS pool is always a bit of a mystery, but we can be sure it's nowhere near the extremes of the Treasury yield curve, and thus MBS are splitting the difference at the moment, very close to unchanged here at the end of the day.
In terms of day-over-day rate sheet comparisons, that's too little, too late. This morning's weakness, combined with the volatility surrounding economic data and Yellen comments leaves us in weaker shape on average. That said, we haven't even gotten to the week's juiciest non-NFP data. With April being a new month/quarter, and tomorrow bringing the important ISM Manufacturing data, we'll get a chance to see how much of a connection to economic data we should expect through the rest of the week.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
| MBS || |
96-18 : +0-02
100-20 : +0-01
103-31 : -0-01
| Treasuries || |
0.4261 : -0.0239
2.7226 : +0.0106
3.5616 : +0.0176
| Pricing as of 3/31/14 4:01PMEST |
Today's Reprice Alerts and Updates
2:26PM : MBS at Best Levels; Positive Reprice Potential
11:02AM : Range-Bound Overall, but Back Toward Best Levels Now
10:26AM : ALERT ISSUED: Fighting Back against Weakest Levels Frustrating Day to be a Bond
9:58AM : Limited Support From Weaker Chicago PMI Data; More Support From Yellen
9:01AM : Bond Markets Weaker Overnight; No Reprieve Into Domestic Session
MBS Live Chat Highlights
Benjamin Biscoe : "cant get pricing out of OB nor run DU or LP from encompass"
Jason Anker : "Ellie says its a national issue"
Benjamin Biscoe : "just got this update from our helpdesk: There is little-to-no improvement to report though we have been in touch with EM multiple times over the course of the hour. They are still working to identify the root cause of the current issues and develop a resolution. We’ve involved representatives at all levels of the organization and will continue to work to restore full functionality asap. "
Benjamin Biscoe : "just got the following in an email from ellie mae: Clients have reported an issue affecting access to the Encompass® Homepage, Ellie Mae Network Services™, Encompass Docs Solution™ and services with dependencies on the Ellie Mae Network. Ellie Mae is investigating the root cause and will report as soon as possible when determined and resolved.
In the meantime, clients can bypass Encompass Homepage errors and perform work in Encompass that is not reliant on Ellie Mae Network Services at this time.