As we frequently discuss, 10yr yields are the best technical benchmark for how rates are moving even though mortgage rates themselves are directly informed by MBS. As such, the policy is to look first at the general trend presented by Treasuries and make note of any major departure in MBS.
The last few sessions have been a major departure. We can fairly safely assume most of it is driven by the newfound "love" for MBS introduced by Dudley on Tuesday. He basically said the Fed should change its stance on ending reinvestments on its holdings so that it's not the first thing that happens after tapering wraps up.
Previously, we'd heard from Bernanke himself that the Fed wanted to get back to a "predominantly Treasury portfolio." Nothing has happened to suggest the longer term goals of the Fed board have changed, but this would delay that process and afford MBS more time to receive steady demand from the Fed.
With that in mind, MBS are right in line with yesterday's highs of 102-17. Those highs were achieved right at the close.
Treasuries, on the other hand, hit their best levels yesterday right at the open--2.525. Now they're up to 2.55--very close to the highest levels of the past two days.
Today's events haven't done much to change anything for anyone. The data was slightly weaker than expected with Claims coming in at 326k vs a 310k forecast and Existing Home sales just a hair under consensus. Much like the Housing Starts data, today's Home Sales were propped up by non-SFRs.
On balance, the data should be bond-market-positive, but tradeflows and technicals are proving to be a stronger consideration, possibly with an eye toward the extended weekend and next week's Treasury supply (auctions).
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
| MBS || |
98-10 : -0-02
102-17 : -0-01
105-19 : +0-00
| Treasuries || |
0.3507 : +0.0117
2.5517 : +0.0157
3.4236 : +0.0076
| Pricing as of 5/22/14 12:08PMEST |
Morning Reprice Alerts and Updates
11:02AM : MBS Off Highs as Treasuries Test Weakest Levels
10:12AM : MBS in Positive Territory After Tepid Existing Sales Data
8:39AM : Bond Markets Weaker Overnight; Improving Slightly After Jobless Claims Data
Live Chat Featured Comments
Matthew Graham : "RTRS- US JOBLESS CLAIMS ROSE TO 326,000 MAY 17 WEEK (CONSENSUS 310,000) FROM 298,000 PRIOR WEEK (PREVIOUS 297,000)"
Matthew Graham : "RTRS- US CONTINUED CLAIMS FELL TO 2.653 MLN (CONS. 2.660 MLN) MAY 10 WEEK FROM 2.666 MLN PRIOR WEEK (PREV 2.667 MLN)"
Scott Valins : "MBS outperforming"
Matthew Graham : "RTRS- US APRIL EXISTING HOME SALES 4.65 MLN UNIT ANNUAL RATE (CONSENSUS 4.68 MLN), VS MARCH 4.59 MLN (PREV 4.59 MLN)-NAR"
Jason Anker : "Signs of stabilization hopefully"
Jason Anker : " May 13, 2014 – The Massachusetts Association of REALTORS® (MAR) reported today that pending home sales for single-family homes had its biggest April since MAR began tracking pending home sales in January 2004"
Ted Rood : "Question for the group: Do you have locks that expire on non business days, or do they automatically roll to next business day? Just noticed my lock on loan I am HOPING to close Friday expires Memorial Day, obviously won't be closing then."
Michael Pennington : "My locks always carry over to the Next Business Day"
Jason Anker : "TR, yes roll to next day is the norm"
Hugh W. Page : "Boy I wish distressed sales were only 15% in FL. And we're still between 50 to 65% CASH SALES depending on market!"