Bond markets have been slightly more active today both in terms of volume and volatility. Overnight trading was essentially a wash. 10yr yields were almost perfectly unchanged by 8am. Shortly thereafter, headlines concerning Putin's willingness to discuss ways to resolve the Ukraine crisis made for a modest amount of weakness in bond markets.
With that, MBS and Treasuries began the day in slightly weaker territory, but began to recover in fairly linear fashion. Things got less linear right as Yellen's prepared remarks were released, but after spending a few minutes in both weaker and stronger territory, the rally returned to its previous trajectory.
Yellen didn't have any surprises for markets, but the absence of negative surprises is good enough for bond markets to keep the pressure on the range boundaries. 10yr yields are at 2.588, with 2.57 being the lowest edge of the range. Fannie 4.0s are 5 ticks higher at 105-13, well past their higher end of the range through February, but set to "roll" tomorrow night, thus shedding at least enough to bring prices back within the range. Even so, rates are the lowest they've been since November, but we still don't have a convicted attempt to break the longer term range. That said, we look more ready to do that than we have at any other time this year.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
| MBS || |
98-06 : +0-06
102-10 : +0-07
105-13 : +0-05
| Treasuries || |
0.4028 : -0.0242
2.5860 : -0.0090
3.3960 : +0.0150
| Pricing as of 5/7/14 12:40PMEST |
Morning Reprice Alerts and Updates
12:05PM : Positive Reprice Potential Continues; Holding Gains After Yellen
10:17AM : As Expected, No Surprises from Yellen, but Bonds Improve; Q&A Still to Come
9:12AM : Bond Markets Weaker on Putin Comments; What's Econ Data?
Live Chat Featured Comments
Matthew Graham : "RTRS- U.S. Q1 NON-FARM PRODUCTIVITY -1.7 PCT, LARGEST DECLINE SINCE Q1 2013 (CONSENSUS -1.0 PCT) VS Q4 +2.3 PCT (PREV +1.8 PCT)"
Sung Kim : "santelli just said if we dont get below 2.50% in the next several weeks, then he will reevaluate his 2% before 3% year end 10y"
William McGuirt : "Yellen comments gonna move market?"
Matthew Graham : "As the chair of the Federal reserve and because she'll be speaking in a more official venue than the average Fed speech, there is certainly market moving potential in today's Yellen testimony. That said, I'm not sure what she could say that would be much of a surprise at the moment."
Sung Kim : "when was the last time we have been in such a prolonged range for 10y?"
Matthew Graham : "late 2011 - mid 2012 is the closest recent example"
Sung Kim : "any idea what the fibonacci retracement levels are from the top?"
Jason Harris : "We just annonced FHA down to 580 Approve Eligible....no other real major overlays (45% ratio max up to 620)....pretty cool"
Matthew Graham : "RTRS- PUTIN SAYS RUSSIA WANTS THE SWIFTEST POSSIBLE RESOLUTION OF UKRAINE CRISIS, SAYS INTERESTS OF ALL UKRAINIANS MUST BE TAKEN INTO ACCOUNT - RIA"
Matthew Graham : "RTRS - FED'S YELLEN SAYS HIGH DEGREE OF MONETARY ACCOMMODATION WARRANTED GIVEN "CONSIDERABLE" SLACK IN LABOR MARKET, LOW INFLATION"
Matthew Graham : "RTRS - FED'S YELLEN SAYS DO NOT INTEND TO SELL MORTGAGE DEBT EXCEPT WHEN HOLDINGS VERY SMALL"
Matthew Graham : "RTRS - FED'S YELLEN SAYS LIKELY TO CEAESE REINVESTMENT OF PRINCIPAL, THEN MBS HOLDINGS WILL DECLINE"
Matthew Graham : "RTRS - FED'S YELLEN SAYS SOME POCKETS WHERE COULD BE MISVALUATIONS, LIKE SMALLER CAP STOCKS, BUT OVERALL NO BUBBLES"
Brent Borcherding : "When the fed says no bubbles it makes me nervous."
Victor Burek : "thinking the same"