Bond markets started the domestic session in line with yesterday's latest levels, which were also yesterday's lows. Trading levels maintained a somewhat volatile sideways pattern until the 9:30am stock market open.
At that point, both sides of the market came alive. Stock futures were calm overnight and leading up to 9:30am, but the opening of the 'cash' market at 9:30am brings a major glut of liquidity in a much more profound way than we see in Treasuries. In other words, the 9:30am stock open can be a market mover of its own accord, simply because it marks the arrival of the full traders guest list for the day.
That was the case today and it worked to bonds' advantage. MBS began moving steadily higher--even managing to outperform Treasuries--and didn't let up until 2pm. Even then, there was no reversal of the gains--simply a sideways drift toward the close.
The only significant bond-market-related news of the day was a speech from Fed governor Dudley with positive undertones for bonds and potentially negative implications for stocks. Either that or stocks were simply negative and market participants forced Dudley's comments to fit into the existing trading patterns. Whatever the case, Dudley's comments didn't hurt and the big story for the day was clearly the stock/bond interaction, which we could observe well before Dudley ever hit the wires.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
| MBS || |
98-14 : +0-11
102-16 : +0-12
105-16 : +0-10
| Treasuries || |
0.3387 : -0.0043
2.5142 : -0.0218
3.3875 : +0.0035
| Pricing as of 5/20/14 4:39PMEST |
Today's Reprice Alerts and Updates
2:12PM : Ongoing Positive Reprice Potential as MBS Push New Highs
12:10PM : Positive Reprices Increasingly Possible as Bond Markets Extend Gains
9:59AM : Back into Positive Territory after Stock Open
9:19AM : Bond Markets Slightly Weaker After Calm Overnight Trading
MBS Live Chat Highlights
Jeff Anderson : "Was there news around 11;45 to get equities dumping?"
Matthew Graham : "looked closer to 12:00, so first thought is the EU close."
Matthew Graham : "RTRS - PLOSSER SAYS FUNDAMENTALS OF HOUSING MARKET REMAIN SOUND"
Matthew Graham : "RTRS - PLOSSER SAYS REFORM OF HOUSING POLICY MUST MAKE GOVERNMENT SUBSIDIES TRANSPARENT, AVOID ANOTHER "HEADY" REAL ESTATE BOOM"
dustin mcalister : "student loans deferred 12 months from app date, closing date or first payment date? "
Ted Rood : "I'd say closing. You're going FHA, I assume?"
Matthew Graham : "RTRS - PLOSSER: U.S. OVERBUILT HOUSING BEFORE CRISIS AND IS RUNNING DOWN INVENTORY NOW"
Christopher Stevens : "pretty sure most homebuilders downsized during and after the crisis and inventory was being reduced until late 2012 early 2013 when we thought we were in an overbuilding dilema."
Nathan Miller : "big boys passing along whoppers: .125-pt imp."
Victor Burek : "plaza improved by almost .30"
DIRK POSTUPACK : "Boyfriend and ex girlfriend are on a FHA loan together. Since the FHA loan is assumable, can one of the borrowers assume the terms of the loan and have the other borrower removed from the obligation? "