MBS are coping with the double-edged sword that is stronger housing data this morning. On the one hand, the decisive reversal of an 8-month slide in Pending Home Sales is positive news for the housing market in general. On the other hand, it's putting upward pressure on rates so far today.
Fannie 4.0s moved from 104-18 to 104-12 following the data. While this is enough of a move for negative reprices to be a risk, we haven't seen any so far. That could have something to do with the fact that the losses were stemmed fairly quickly, and aren't quite as severe at the moment (up to 104-15 at the moment).
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